PWC Direct

www.pwc.co.
uk
The direct
economic impact
of gold
October 2013
www.pwc.co.uk
The work carried out by PricewaterhouseCoopers LLP ("PwC") in relation to this report has
been carried out only for the World Gold Council and solely for the purpose and on the
terms agreed between PwC and the World Gold Council. The report does not constitute
professional advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this report and, to the extent
permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do
not accept or assume any liability, responsibility or duty of care for any consequences to
anyone acting, or refraining to act, in reliance on the information contained in this report or
for any decision based on it.
2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to
PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom), which is
a member firm of PricewaterhouseCoopers International Limited, each member firm of
which is a separate legal entity.
The direct economic impact of gold
PwC
Contents
Foreword........................................................................................................................................................................1
Executive summary .......................................................................................................................................................1
Background....................................................................................................................................................................1
Key findings ...................................................................................................................................................................1
Scope of analysis and approach................................................................................................................................... 2
The supply of gold ........................................................................................................................................................ 2
Demand for gold........................................................................................................................................................... 4
Extending the analysis ................................................................................................................................................. 6
Introduction.................................................................................................................................................................. 8
Background................................................................................................................................................................... 8
The gold value chain..................................................................................................................................................... 8
Scope of analysis........................................................................................................................................................... 8
Overview of approach and method.............................................................................................................................. 9
Report structure .......................................................................................................................................................... 11
The supply of gold .......................................................................................................................................................12
Introduction.................................................................................................................................................................12
Mine production..........................................................................................................................................................12
Recycling of gold......................................................................................................................................................... 25
Demand for gold......................................................................................................................................................... 27
Introduction................................................................................................................................................................ 27
Central bank purchases of gold.................................................................................................................................. 27
Investment .................................................................................................................................................................. 28
Gold fabrication and consumption............................................................................................................................ 29
Bar and coin................................................................................................................................................................ 29
Jewellery ..................................................................................................................................................................... 32
Technology.................................................................................................................................................................. 33
Extending the analysis ............................................................................................................................................... 36
Appendix 1 Glossary................................................................................................................................................ 38
Appendix 2 Methodology........................................................................................................................................ 40
Introduction................................................................................................................................................................ 40
Supply of gold ............................................................................................................................................................. 40
Demand for gold......................................................................................................................................................... 43
Contacts....................................................................................................................................................................... 49
PwC
Foreword
It is with great pleasure that I am able to introduce The Direct Economic Impact of Gold, a new independent
report from PwC, commissioned by the World Gold Council.
This report is both ground-breaking in scope and timely in its analysis. It addresses, for the first time, the direct
economic impact of gold on the global economy, and does so in a way which is objective in stance and rigorous
in its treatment of complex data. The report is unique in looking at an entire value chain, including gold mining,
refining, and fabrication and consumption. It helps us understand the fundamental role that gold plays in
advancing economic development and ultimately the needs of society.
The scope of the report has been determined by the availability of data and therefore there are some limitations
within the report. It details where additional research would improve understanding of the significant
contribution the gold industry makes to households, communities and nations alike. If one were to add in the
indirect value created by the gold industry, the value delivered would likely be significantly larger; indeed
quantifying this multiplier effect would merit its own research report.
This is a time of change for the entire gold industry. The mining sector is facing a barrage of converging
challenges; increasing costs, ever higher expectations from a wide range of stakeholders and a gold price
which could call in to question the viability of some projects and lead to a contraction in supply. Demand
however is increasing, fuelled by; expanding middle classes in Asia, diversification of reserve assets by central
banks and a growing desire for physical gold amongst many Western savers.
In the midst of all this, and at a time when the extractive industries are being widely scrutinised for their global
impact, it is important to be reminded of how gold contributes so broadly to the global economy, ranging from
foreign exchange earnings for gold-exporting countries to employment opportunities and tax revenues This
study demonstrates this clearly; of particular note is the fact that the economic value generated has a direct and
sustained impact on the local economies where gold production or consumption takes place.
I believe that it is only on the basis of a more realistic and better rounded understanding of golds true impact
on our global community that the gold industry can further develop and sustain effective partnerships with all
our stakeholders. I hope that this research will contribute to the quality of this conversation and lead to further
research and discussion.
Randall Oliphant, Executive Chairman, New Gold Inc. and Chairman, World Gold Council
PwC 1
Executive summary
Background
As part of its work as the market development organisation for the gold industry, the World Gold Council
commissioned PricewaterhouseCoopers LLP (PwC) to analyse the direct economic and fiscal contribution of
gold in the worlds major gold producing and consuming countries. The key measures used are gross value
added (GVA), which measures the contribution to gross domestic product (GDP), employment and taxes paid.
This is the first time that the available evidence on the contribution of gold has been collated. As such, the
report provides a baseline assessment of golds direct economic and fiscal contribution.
Key findings
Global gold supply reached 4,477 tonnes in 2012 with approximately two thirds coming from mining and one
third from the recycling of gold.
The 15 largest gold producing countries, which accounted for around three quarters of global output,
directly generated US$78.4 billion of gross value added (GVA) in 2012 approximately equal to the GDP
of Ecuador or Azerbaijan or 30% of the estimated GDP of Shanghai.
Large scale, formal gold mining in the top 15 producing countries directly employed an estimated
527,900 people in 2012.
Gold mining is a significant source of exports for some countries: in 2012, gold exports were 36% of all
Tanzanian exports and 26% of exports in Ghana and Papua New Guinea.
Limited data are available on the scale of the contribution of gold mining to the public finances: such
evidence as exists suggests that mining royalties are only a small proportion of the total fiscal
contribution of gold mining companies.
The estimated GVA of global gold recycling is between US$23.4 billion and US$27.6 billion.
The GVA per tonne of recycled gold is approximately US$16 million compared with approximately
US$36 million for gold produced from mines.
In 2012, investment demand (consisting of bar and coin and gold-backed exchange traded funds (ETFs))
accounted for 35% of global gold demand, central bank gold purchases accounted for 12%, jewellery accounted
for 43% and use in technology/manufacturing accounted for around 10% of gold demand.
The 13 largest gold consuming countries in 2012 accounted for 75% of gold used for fabrication and 81%
of gold used for (final) consumption, either in the form of jewellery or investment products such as small
bars and coins.
Their activities directly generate up to USS110 billion of GVA approximately equal to the GDP of
Bangladesh or half the GDP of Hong Kong or Singapore.
The direct GVA associated with the fabrication of small bar and coin is estimated to be US$13.3 billion
across the top 13 consuming countries whilst the direct GVA associated with consumption is estimated to
be US$38.3 billion: these estimates are not additional since the estimated GVA based on fabrication will
be included in the consumption based estimate.
The direct GVA attributable to gold jewellery fabrication and consumption across the top 13 gold
consuming countries is estimated at US$69.8 billion.
The direct GVA attributable to golds use in technology fabrication is estimated at almost US$4 billion
(excluding the value generated by the retail component of these goods).
Overall, the GVA associated with the supply of and demand for gold is estimated to be in excess of US$210
billion across those countries in scope of this analysis: this means it is similar to the GDP of the Republic of
Ireland or the Czech Republic or Beijing.
PwC 2
Scope of analysis and approach
The report examines the key stages in the value chain for gold from its extraction from the ground through
processing to its application in diverse uses. The analysis of the supply of gold focuses on mine production
and the recycling of gold whilst the demand side analysis focuses on gold fabrication (primarily for jewellery
and technology) and certain forms of investment (principally bar and coin). The analysis does not examine the
economic impact of holding gold on portfolio performance as this is already addressed by other work being led
by the World Gold Council
1
.
The economic analysis concentrates on the direct economic impacts: none of the indirect, induced or wider
economic impacts that might arise is considered systematically. The key metrics are GVA which measures the
economic contribution of those entities engaged in the gold value chain and reflects their contribution to the
economies in which they operate and employment. GVA is used because it measures the value of an activity in
a way which lends itself to direct comparison with Gross Domestic Product, which is used worldwide to
measure economies economic output. Its use in this report does, however suffer from practical limitations.
Not all the data needed to measure the economic impact are readily available from secondary sources. The
resulting gaps are filled by making estimates by linking and extrapolating from available datasets.
The fiscal analysis focuses on the revenues derived by governments from those taxes and other fiscal measures
which are peculiar to the extraction and use of gold rather than those which apply to all or most businesses
regardless of their sector (e.g. corporation tax). This is largely because of the practical difficulties of assessing
the scale of all these taxes on a consistent basis. This means that the estimated tax payments presented later in
this report are likely to understate significantly the total fiscal contribution of gold mining companies.
No consideration is given to the social and environmental impacts associated with the supply of and demand for
gold.
The report focuses on those countries which are the largest producers and consumers of gold and, together,
accounted for at least three quarters of global gold mine production and gold demand. It includes the 15 major
gold producing countries and the 13 major gold consuming countries. It covers the year 2012, the most recent
year for which there is data.
In all cases, the report summarises the gross economic and fiscal contribution directly attributable to gold. It
draws on a range of secondary data sources: no work has been done to assure any of these secondary data nor
has any primary data collection been undertaken.
The supply of gold
Global gold supply reached 4,453 tonnes in 2012. Approximately two thirds of new gold supply each year comes
from mining with the remaining one third coming from the recycling of gold.
Mine production
The focus of this report is on formal, large scale mining. The impact of artisanal gold production is also
considered, although the analysis is limited because reliable and consistent statistics are not available on this
form of supply across all the countries within scope.
Global mine production was 2,861 tonnes in 2012. Mines in the top 15 gold producing countries extracted 2,177
tonnes of gold in 2012, 76% of the world total. The six largest producers, China, Australia, the United States,
Russia, Peru and South Africa, extracted more than half of the gold mined globally.
The gold mines in the worlds top 15 producing countries are estimated to have generated US$78.4 billion of
direct GVA in 2012. This is equal to the entire national economic output of Ecuador or Azerbaijan or 30% of the
estimated GDP of Shanghai. The direct GVA for each country is shown in Figure 1. This impact excludes the
indirect or induced effects of gold mining which arise from spending in the supply chain and by employees on
goods and services. If this impact was included, the economic contribution of gold mining would be
significantly bigger.
China is estimated to derive the largest economic contribution directly from gold mining at US$12.6 billion in
2012, although this is only a small proportion of the total output of the worlds second largest economy (0.2%).
1
See for example World Gold Council (2012) Gold as a strategic asset for UK investors: portfolio risk management and capital
preservation, July 2012.
PwC 3
The direct GVA from gold mining is also estimated to be over US$8.0 billion in the US, Australia, Russia and
Peru.
The significance of gold mining to national economies varies considerably. It is estimated to be greatest in
Papua New Guinea (15% of GDP), followed by Ghana (8% of GDP) and Tanzania (6% of GDP). For these
countries, gold mining is one of the most significant sources of wealth creation in the economy.
The average amount of economic value added per ounce of gold is US$1,139 and ranges from US$946 in China
to US$1,352 in Peru in 2012. The differences between countries reflect variations in labour costs and
productivity.
Figure 1: Direct gross value added by gold mining (2012)
Source: PwC analysis based data from the London Bullion Market Association (LBMA), Thomson Reuters GFMS Mine Economics and
Gold Survey 2013, International Monetary Fund
The employment supported by gold mines is an alternative measure of economic contribution. Total direct
employment in gold mining across the 15 largest gold mining countries is estimated to be 527,900 in 2012.
These estimates understate significant employment in artisanal and small scale production outside the formal
sector as well as the indirect and induced employment attributable to gold mining
2
.
Three countries stand out: South Africa has an estimated 145,600 gold mining employees
3
, Russia 134,000 and
China is estimated to have 98,000 employees. Gold mining also employs more than 15,000 people in four other
countries: Australia (32,300), Indonesia (18,600), Tanzania (17,000) and Papua New Guinea (16,100). The
basis for these estimates is explained in Appendix 2.
Average gold production per head in 2012 was around 124 ounces of gold per worker
4
and the average GVA per
worker across the 15 largest producing countries is estimated at US$295,000. The average country level
estimate of GVA per worker varies from US$841,800 in the United States to US$39,600 in South Africa.
The scale of capital expenditure (capex) made by gold mining companies is a forward looking indicator of future
GVA and employment. It is not, however, additional to GVA as some of the resources used to fund capex (such
as retained profits) are already captured in GVA. Moreover, not all gold mines publicly report their capex. In
2
Various analyses exist which assess the scale of these multiplier effects. Most of the evidence relates to mining as a whole rather than just
gold mining.
3
This reflects its labour intensive, deep level mining.
4
Including contractors where available.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
-
2
4
6
8
10
12
14
Direct GVA as a % of
GDP
GVA S$ billions
PwC 4
2012, the level of capex by those companies which do report their capex was US$17.7 billion. About 34% of the
capex was spent maintaining existing operations and 66% was spent either expanding current operations or
developing new operations. These figures are likely to underestimate significantly the actual level of capex.
The most important destinations for investment received in 2012 were Canada (US$2.6 billion), the United
States (US$2.5 billion) and Australia (US$2.3 billion).
For some countries, gold mining is a significant source of exports and, therefore, foreign exchange earnings. In
2012, gold exports were 36% of all Tanzanian merchandise exports, 26% of exports in both Ghana and Papua
New Guinea and 21% of Peruvian exports. The United States and China are the two largest exporters although
extensive gold trading inflates the volume of gold exports: their export earnings in 2012 were US$33.7 billion
and US$22.9 billion respectively.
The report also considers the fiscal contribution of gold mining to public finances. Gold mines bear a number of
specific taxes in addition to the taxes on profits and labour borne by all companies. These specific taxes include
mining royalties, licence fees and export duties.
Only limited data are available on the overall scale of the contribution of gold mining to the public finances.
Estimates have, however, been developed of the scale of mining royalty payments made to government. These
suggest that the combined mining royalty payments in 2012 across all 15 countries were US$4.1 billion.
Evidence from other case study research which focuses on either individual companies or countries - suggests
that mining royalties are only a small proportion of the total tax contribution made by mining companies.
Recycling of gold
Recycling of gold is the other significant source of gold supply accounting for around 36% of global supply in
2012. The location of gold recycling activity is not tied to mine production and is more likely to be linked to gold
consumption.
Data limitations, including the lack of information on the countries in which recovered gold is subsequently
refined, mean that the GVA of gold recycling cannot be estimated at the country level. Instead, the analysis is
limited to the global level.
The estimated GVA of global gold recycling activity is presented as a range in Table 1. It is based on estimating
the value of recycled gold (valued at the relevant market price) and then estimating the proportion which is
GVA by applying a GVA/turnover ratio. Two different GVA/turnover ratios are used: the lower bound estimate
uses the ratio for the manufacturing sector globally and the upper bound uses the ratio for the recycling sector
globally.
Table 1: Estimated turnover and GVA of global gold recycling (US$ millions, 2012)
Turnover GVA
Lower bound based on the global
manufacturing sector ratio
Upper bound based on the
global recycling sector ratio
World total 86,718 23,429 27,576
Source: PwC analysis using data from World Gold Council, World Input-Output Database (WIOD) and national statistical offices
The GVA estimates for global gold recycling range from US$23.4 billion to US$27.6 billion. The value added per
tonne of recycled gold using the average of the lower and upper bound estimates is approximately US$15.8
million. This compares with the GVA per tonne of gold produced from mines of approximately US$36.0
million.
Demand for gold
The uses of gold are wide-ranging reflecting both the physical appearance and properties of gold and its
advantages as a store of value.
In 2012, investment demand (consisting of bar and coin and gold-backed Exchange Trades Funds (ETFs)
5
)
accounted for 35%, central bank gold purchases accounted for 12%, jewellery accounted for 43% and use in
technology/manufacturing accounted for around 10% of gold demand.
5
ETFs cannot clearly be linked to specific countries and are excluded from the analysis of the direct economic impact.
PwC 5
The 13 largest gold consuming countries in 2012 accounted for 75% of gold used for fabrication
6
and 81% of that
used for (final) consumption, either in the form of jewellery or investment products such as small bars and
coins. By far, the two largest consuming countries are India and China.
The analysis of the economic impact of gold demand has focused on three segments of the market:
Bar and coin fabrication and consumption;
Jewellery fabrication and consumption; and
Technology/manufacturing (e.g. electronics, decorative uses and dentistry).
In each case, the focus is on providing estimates of the GVA attributable to gold during the fabrication process.
In addition, the wholesale/retail GVA is also estimated for jewellery and bar and coin: in the case of
manufacturing uses, the complexity of the relevant value chains allied to a lack of data on the consumption of
those manufactured goods which use gold as an input, precludes analysis of the GVA of retail activity of these
manufactured goods.
Bar and coin
Gold bar and coin is the most important form of investment by volume. Bar and coin demand has surged
following the financial crisis and accounted for the largest proportion (82%) of total investment demand in
2012. The focus of this analysis is on the economic impact of fabricating and consuming bar and coin: the
economic value that gold has as an investment asset in portfolio diversification strategies is not considered as
the World Gold Council is carrying out separate studies in this area
7
.
The direct GVA associated with bar and coin fabrication is estimated in two steps. First, the mark-up achieved
by fabricators is applied to the value of the purchases of gold to estimate their turnover. Second, the GVA is
then estimated by multiplying the estimated turnover by the share of turnover that is GVA. In total, the direct
GVA associated with the fabrication of gold bars and coins is estimated to be US$13.3 billion across the top 13
consuming countries, led by India, China and Vietnam.
The direct GVA associated with the consumption of bar and coin is estimated in a similar way. First, the mark-
up achieved by sellers of bar and coin over the underlying cost of the gold is estimated to derive turnover.
Second, the share of this turnover that is GVA is then estimated. In total, the direct GVA associated with the
consumption of gold bar and coin is estimated to be US$38.3 billion across the top 13 consuming countries, led
by India, China and Vietnam. This estimate should not be seen as additional to the estimate based on
fabrication as at a global level - the value added by fabrication will be included in the consumption based
estimate.
Neither estimate captures the economic value, including GVA, generated by subsequent trading in gold for
example, through brokerage firms and banks.
Further details of both methods are in Appendix 2.
Jewellery
Jewellery accounts for the largest proportion of gold fabrication and consumption demand. India and China
account for more than half of global gold jewellery fabrication and consumer demand.
Data from national governments do not typically provide the level of granularity required to assess the GVA of
the fabrication of gold jewellery directly. Consequently, it is estimated by using the mark-up achieved by
fabricators and retailers on purchases of gold to estimate the turnover linked to gold consumption in jewellery.
Further details of the method are in Appendix 2.
Since this approach does not allow for the other complementary inputs to the production process (such as
labour and capital), it will provide conservative estimates of the GVA associated with gold jewellery.
Overall, the direct GVA attributable to gold jewellery fabrication and consumption across the top 13 gold
consuming countries is estimated at US$69.8 billion. Although China fabricates and consumes less gold than
India, its total GVA exceeds that of India because it adds more value per ounce of gold.
6
Fabrication covers the first transformation of gold bullion into a semi-finished or finished product.
7
PwC 6
Technology
Gold is used in a wide range of technological/manufacturing applications because of its electrical conductivity,
malleability and resistance to corrosion. Applications include electronic goods and equipment,
telecommunications devices and household appliances. Gold is also used in healthcare services and
pharmaceutical products due to its biocompatibility and resistance to bacterial colonisation.
Table 2 shows fabrication demand for technology purposes in 2012. Global technology fabrication demand
amounted to around 408 tonnes in 2012, with gold destined for the electronics industry accounting for the
largest share. The United States is the largest consumer of gold for technology purposes followed by China and
Germany.
Table 2: Technology fabrication demand (tonnes, 2012)
Country
Electronics Dentistry
Other industrial and
decorative
Total technology
fabrication demand
1 China 48 - 19 67
2 United States 56 7 3 66
3 Switzerland 5 2 10 17
4 Germany 11 2 3 17
5 Russia 13 2 - 15
6 India 2 - 9 12
7 Thailand - - 3 3
Total 135 13 46 195
World total 285 39 84 408
Source: Thomson Reuters GFMS Gold Survey 2013 and World Gold Council
The approach to estimating the GVA associated with technology fabrication is similar to that used for bar and
coin and for jewellery.
On this basis, the direct GVA attributable to golds use in technology fabrication is estimated at almost US$4
billion in 2012 with the United States accounting for a lions share of this value (almost 56%).
This estimate does not capture the value generated by the retail component of these goods due to the lack of
available data on end-use.
Extending the analysis
As part of the preparation of this report, consideration has also been given to how the analysis might be
extended, either to enhance the robustness of the estimates of the direct impacts or to broaden their scope to
include the indirect, induced and wider economic and fiscal impacts. The key conclusions are summarised
below.
Direct impacts
The analysis of the direct economic impacts can potentially be improved and extended in several ways:
The robustness of the impacts associated with the supply of mined gold can potentially be enhanced
by gathering mine or country level data from mining companies through primary research.
Further work could be undertaken to understand better the significance and economic contribution of
artisanal gold production.
The estimates of the economic impact of gold recycling can be enhanced by developing a better
understanding of where the refining activity takes place and how much value added is associated with
this process.
There is more scope for strengthening the methods and data used to estimate the impacts associated with
the demand for gold as the nature of the organisations involved and the complexity of the value chains
mean that more challenges need to be overcome.
The analysis of the direct fiscal impacts of gold mining can potentially be improved and extended in
several ways:
By gathering mine or country level data on gold specific taxes and other fiscal measures actually paid
by gold mining companies on a country by country basis through primary research.
PwC 7
By extending the analysis to cover all taxes actually borne (or, possibly, collected) by gold mining
companies.
In considering these options, it will be important to recognise forthcoming developments in reporting of tax
payments in the mining sector.
The analysis of the direct fiscal impacts associated with gold recycling and gold demand can potentially
be extended by undertaking primary research with the major gold recyclers and gold consumers to gather data
on any gold specific taxes that they bear. This will include import duties paid on gold as a raw material and
duties on exports of finished or semi-finished products.
Indirect, induced and wider impacts
The current analysis has focused on the direct economic and fiscal impacts of gold supply and demand. As such,
it excludes the indirect, induced and wider impacts that arise. These may be significant, although few existing
studies have quantified them to date for gold mining.
Various possible methodologies could be used to estimate the indirect and induced impacts:
Multiplier analysis;
Input-output analysis; and
Dynamic economic modelling (also known as computable general equilibrium modelling).
Each methodology has its strengths and weaknesses, but all are potentially limited by the availability and
quality of economic data related to the supply of and demand for gold.
PwC 8
Introduction
Background
As part of its work as the market development organisation for the gold industry, the World Gold Council
commissioned PricewaterhouseCoopers LLP (PwC) to analyse the direct economic and fiscal contribution of
gold in the worlds major gold producing and consuming countries. This is the first time that the available
evidence on the economic and fiscal contribution of gold across the value chain has been collated. An important
element of the work has involved identifying the available evidence. The report, therefore, provides a baseline
assessment of the direct contribution of gold.
The remainder of this introduction:
Describes the gold value chain;
Explains the scope of the analysis;
Provides an overview of the approach and method that have been used in the analysis; and
Outlines the structure of this report.
The gold value chain
Figure 2 illustrates the key elements of the value chain for gold and the products which its use supports, for
example in jewellery, technology and in bar and coins. The analysis considers the supply of gold separately from
the demand for gold. The supply side analysis focuses on mine production and gold recycling. The demand side
analysis focuses on the use of gold in fabrication.
Figure 2: The gold value chain
Scope of analysis
Activities
This report examines the direct economic and fiscal impact of each of the key stages in the value chain for gold
from its extraction from the ground through processing to its application in diverse uses. The analysis of the
supply of gold focuses on mine production and extraction as well as the recycling of gold. The demand side
analysis focuses on gold fabrication and, where possible, wholesale and retail of gold products. The analysis
does not examine the economic impact of holding gold on portfolio performance as this is already addressed by
other work being led by the World Gold Council
8
.
8
PwC 9
Impacts
The focus of the report is on the economic and fiscal impacts of the supply of and demand for gold.
Typically, an economic impact analysis might cover up to four different types of effect:
The direct impact on the host economy (which is usually measured in terms of contribution to national
output or employment);
The indirect impacts which arise from the spending of suppliers (which can be measured in the same
terms);
The induced impacts on the economy through the spending of employees and suppliers employees; and
Any wider economic impacts which accrue to other stakeholders.
The economic analysis in this report, however, concentrates on the direct economic impacts which arise along
the value chain for gold. None of the indirect, induced or wider economic impacts that might arise from the
supply of gold and its demand is considered systematically here although the analysis provides examples of the
activities of gold producers to develop their local supply chains.
In considering the fiscal impacts, the focus is on the impact of those taxes and other fiscal measures which are
peculiar to gold rather than those which apply to all or most businesses regardless of their sector (e.g.
corporation tax).
At this stage, no consideration is given to the social and environmental impacts associated with the supply of
and demand for gold.
Geography
The report focuses on the 15 major gold producing countries and the 13 major gold using countries. Together,
these countries accounted for 76% of global gold mine production in 2012 and 81% of gold demand
9
.
Time period
The report primarily provides a baseline assessment of golds direct economic contribution in 2012, the most
recent year for which there is data. As such, it has been developed so that it can be updated in the future.
Where year to year volatility in supply and/or demand data is an issue, the report uses averages across time and
where data are not available for 2012, earlier data are used: where this occurs, this is made clear in the report.
The report does not provide a historic view of golds direct economic impact nor does it provide a forward
looking assessment of golds contribution, although some indicators are forward looking (e.g. investment).
Overviewof approach and method
Figure 3 provides an overview of the approach to the analysis based on the scope of work described above. It
highlights the elements of the gold value chain which are assessed and summarises the measures of the direct
economic and fiscal impact which are assessed.
Impact measures
With any impact assessment, an important issue is how best to measure the economic and fiscal impacts in
scope. This report defines a set of primary and secondary measures (see Table 3). Gross value added (GVA) is
the key measure of golds contribution to economic output. It measures the value of goods and services
produced via the activity of firms engaged in extracting, refining and using gold. Employment is essentially an
alternative measure of economic contribution. The revenue derived from taxes and other gold specific fiscal
measures is a measure of the contribution to the public finances.
Table 3: Indicators of economic and fiscal impact
Primary Secondary
Supply Gross value added
Employment
Taxes and other gold specific fiscal measures paid
Investment
Exports of gold
9
Demand for bar and coin and jewellery.
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Primary Secondary
Demand Gross value added
Employment
Purchases of gold
Imports of gold
Exports of products containing gold
Source: PwC
In all cases, the report covers the gross economic and fiscal contribution associated with production and
consumption of gold.
Figure 3: Overviewof approach and method
All the monetary impacts are expressed in United States dollars. Amounts in local currency units are converted
to United States dollars using annual average exchange rates. The report examines both the absolute economic
and fiscal contribution of gold related activities and also expresses them relative to metrics covering the
primary sector and the economy as a whole.
Data sources
The report draws on a range of secondary sources including:
Thomson Reuters GFMS Gold Survey 2013;
Thomson Reuters GFMS Mine Economics;
World Gold Council publications;
Official statistics, notably data from national accounts (and other national government statistics);
Trade associations;
Company accounts and reports;
Multilateral organisations such as the International Monetary Fund and UNCTAD; and
Fiscal data from a number of Extractive Industries Transparency Initiative (EITI) country reports (where
they are available).
PwC 11
No primary data collection has been undertaken as part of this analysis.
The quality and accessibility of data vary significantly from source to source and country to country. A key
feature of the approach is the establishment and application of an effective hierarchy of sources based on three
criteria:
Consistency do the data measure the same metric in the same way?
Timeliness are the data available up to date (i.e. do they cover 2012)?
Robustness are the data sufficiently reliable?
No work has been done to assure any of these secondary data.
In practice, the data needed to apply all the impact measures summarised in Table 3 are not readily available
from secondary sources. In these cases, it has been necessary to estimate the potential impacts by linking and
extrapolating from project and company level data across economies based on volumes (and other methods).
These estimation methods are described in Appendix 2.
Report structure
The report is structured in three further sections as follows:
Section 2 examines the supply of gold and summarises the economic impacts directly associated with
the mining and recycling of gold;
Section 3 analyses the demand for gold which provides our estimates of the economic impacts
attributable to the use of gold; and
Section 4 summarises the suggested next steps.
Two appendices provide further supporting detail:
Appendix 1 contains a glossary of the key technical terms used in this report and explains their
meaning; and
Appendix 2 describes the methodologies that have been used to measure and estimate the direct
economic and fiscal impacts of gold.
PwC 12
The supply of gold
Introduction
Gold supply comes from three sources: mine production, recycling of gold and net gold hedging
10
.
Global gold supply reached 4,477 tonnes in 2012 having increased by 48% from 3,017 tonnes in 2007
11
, with
most of the growth attributable to recycled gold. Approximately two thirds of gold supply each year comes from
mining with the remaining one third coming from the recycling of gold (see Figure 4). The scale of net gold
hedging is not significant.
Figure 4: Global gold mine production and supply of recycled gold (tonnes, 2012)
12
Source: Thomson Reuters GFMS Gold Survey 2013
This section of the report quantifies the principal direct economic and fiscal impacts of the supply of gold,
including the economic output and jobs it supports and the taxes it generates. The analysis is split into two
parts:
Mine production: this covers the contribution of gold mining to national economies, employment and
fiscal receipts in the 15 largest gold producing nations; and
Recycling of gold: this covers the economic impact of gold recycling activities, which are a significant
source of gold supply in some countries.
The impact of artisanal gold production is considered, although the quantitative analysis is limited because
reliable and consistent statistics are not available on this form of supply across all the countries within scope
(see page 17).
Mine production
Global mine production increased by 15% from 2,498 tonnes in 2007 to 2,861 tonnes in 2012
13
. New supply has
been partly spurred by the sharp increase in the gold price, which more than doubled between 2007 and 2012.
Mines in the top 15 gold producing countries extracted 2,177 tonnes of gold in 2012, 76% of the world total.
Table 4 ranks these countries according to the volume of production in 2012. China is by far the largest
10
This measures the impact in the physical market of mining companies gold forward sales, loans and options positions. Hedging
accelerates the sale of gold, a transaction which releases gold (from existing stocks) to the market. Over time, hedging activity does not
generate a net increase in the supply of gold. De-hedging, the process of closing out hedged positions, has the opposite impact and reduces
the amount of gold available to the market in any given quarter.
11
World Gold Council, Gold Demand Trends Full Year 2012.
12
Total mine supply also includes net producer hedging.
13
Thomson Reuters GFMS Gold Survey 2013.
Mine production,
2,861 tonnes, 64%
Recycled gold, 1,616
tonnes, 36%
PwC 13
producer of mined gold, extracting 413 tonnes in 2012, around 14.5% of the world total. The next five largest
producers, Australia, the United States, Russia, Peru and South Africa, account for a further 1,074 tonnes of
gold production and, with China, these six countries extract more than half of the gold mined globally.
The key growth areas for mining in recent years include China and Mexico: Chinese gold production increased
by almost half (47%) between 2007 and 2012 and Mexican production rose by 118% over the same period.
Other countries have seen declines in their production, notably South Africa, where the 2012 mine production
figure of 178 tonnes compared to 270 tonnes in 2007.
Table 4: Major gold producing countries (2012)
14
Country Production
Tonnes
Share of global gold production
%
1 China 413 14.4
2 Australia 250 8.7
3 United States 231 8.1
4 Russia 230 8.0
5 Peru 185 6.5
6 South Africa 178 6.2
7 Canada 108 3.8
8 Ghana 96 3.3
9 Mexico 95 3.3
10 Indonesia 89 3.1
11 Uzbekistan 73 2.6
12 Brazil 67 2.4
13 Papua New Guinea 57 2.0
14 Argentina 55 1.9
15 Tanzania 49 1.7
Top 15 total 2,177 76.0
World total 2,861 100
Source: Thomson Reuters GFMS Gold Survey 2013, PwC analysis
The contribution of gold mining to the economy
The economic contribution of gold mining is assessed by reference to the GVA. The GVA of gold mining can be
estimated using one of two approaches. The first is the income approach which involves calculating the sum of
operating profits, depreciation and amortisation and employee costs. The second is the production approach
which is derived as the value of sales of gold less the cost of intermediate consumption or the cost of inputs and
raw materials directly attributable to that consumption. Both have been used.
Extraction and refining of gold generate a significant economic contribution. It is estimated that gold mining in
the worlds top 15 producing countries generated US$78.4 billion of direct GVA in 2012. This contribution is
significant; it is equal to the entire national economic output of Ecuador or Azerbaijan, countries with
populations of 15 million and 9 million people respectively, or 30% of the GDP of Shanghai.
Gold mining directly generated US$78.4 billion of economic output in 2012
equal to the GDP of Ecuador or Azerbaijan
Economic data from national governments and multilateral institutions do not provide the level of granularity
needed to assess gold minings economic contribution so it is necessary to estimate the direct GVA of gold
mining using financial accounting information for large gold mines. Further details of the approach used can be
found in Appendix 2. In summary, the key components of the analysis are gold mine production and costs
which are used to estimate revenue, operating profits (before tax), depreciation, amortisation and labour costs.
These components are combined to estimate GVA.
14
Note that figures may not sum due to rounding.
PwC 14
This analysis implicitly assumes that the average GVA per ounce of gold is the same across all forms of
production in each country. It also does not consider the indirect or induced effects of gold mining which arise
from spending in the supply chain and by employees on goods and services. If these effects were included the
full economic and fiscal contribution of gold mining would likely increase significantly (see Box 1).
Box 1: Indirect and induced effect of gold mining industry
Although the focus of the current analysis is the direct economic (and fiscal) impact of gold, several studies
point to the significant indirect and induced economic impact of gold mining.
For example, a 2009 study of Newmont Ghana Golds (NGGL) socio-economic impact estimates that overall
NGGLs activities supported 48,300 jobs in Ghana
15
: of these, 1,700 jobs were with NGGL and 5,100 were with
its direct suppliers. In addition, NGGLs suppliers generated an estimated 28,900 jobs and spending by those
employed directly and indirectly supported a further 12,500 jobs.
Similarly, a study by the World Gold Council
16
showed that the four largest gold mines in Peru directly
employed 4,500 workers in 2011 and contributed 1.4% of Perus GDP (in 2010). Using a multiplier of 1.9, which
the authors view as conservative, the study estimates that an additional 4,050 jobs were supported indirectly by
mining operations. Throughout the supply chain, these four mines were estimated to generate additional
salaries of US$240 million.
The estimates of GVA of gold mining, both absolutely and relative to the whole economy, are presented in
Figure 5. The ranking closely follows the production ranking in Table 4. This is not surprising as countries
mining more gold are likely to generate a greater economic contribution.
China is estimated to estimate the largest economic contribution from gold mining at US$12.6 billion in 2012,
although this is only a small proportion of the total output of the worlds second largest economy (0.2%). The
direct GVA from gold mining is also over US$8.0 billion in the US, Russia, Australia and Peru, at US$9.3
billion, US$8.6 billion, US$8.6 billion and US$8.0 billion respectively.
The average amount of economic value added per ounce of gold ranges from US$946 in China to US$1,352 in
Peru in 2012. The average level of value added per ounce of gold is US$1,139.
This analysis only captures the value of the GVA generated in the host country. In practice, some of this value
will flow abroad if profits are remitted overseas. On the other hand, the development of mining operations may
be financed partially from foreign direct investment, which brings additional international capital into the host
country. Similarly, some of the value will flow abroad if (any) migrant workers partly remit their salaries.
The significance of gold mining to national economies is also shown in Figure 5. It is estimated to be greatest in
Papua New Guinea (15% of GDP), followed by Ghana (8% of GDP) and Tanzania (6% of GDP). For these
countries, gold mining is one of the most significant sources of wealth creation in the economy, especially when
it is recalled that these estimates do not capture the indirect and induced effects of gold mining.
15
Kapstein, E. and Kim, R. (2011) The Socio-Economic Impact of Newmont Ghana Gold Limited.
16
World Gold Council (2011) The economic contribution of large-scale gold mining in Peru, March 2011.
PwC 15
Figure 5: Direct gross value added (GVA) by gold mining (2012)
Source: PwC analysis based data from the London Bullion Market Association (LBMA), Thomson Reuters GFMS Mine Economics and
Gold Survey 2013, International Monetary Fund
Employment in gold mining
The employment supported by gold mining is an alternative measure of its economic contribution to GVA. As
with GVA, however, data from national governments and multilateral institutions do not consistently provide
sufficiently granular information to identify the number of people directly employed in gold mining, so it is
necessary to look to alternative sources or to estimate these figures.
Two different sources are used to estimate national employment (including contractors) in gold mining:
National sources of gold mining employment: these include national chambers of mining, other
trade associations and, in the case of the United States, the national statistical office.
Company level data: company level data are used to estimate the average productivity of gold mines
(i.e. output per worker) in each producing country so that the implied employment can be inferred from
the GVA estimates in Figure 3. In these cases, the estimated output per worker is derived largely from
companies engaged in large scale mining whereas the estimated GVA includes all estimated gold
production.
The results have been benchmarked against data on the broader mining sector. Often government sources
provide employment data on the broader mining sector and these are used to provide an upper bound for gold
mining employment as well as a benchmark for mine productivity. Further details of the approach are
explained in Appendix 2.
The estimates of employment (including contractors) in gold mining are shown in Table 5 together with the
basis of the estimate.
Table 5: Direct employment in gold mining in major gold producing countries (2012)
Country
Employment
Headcount
Estimation approach
1 South Africa 145,600 National sources, South African Chamber of Mines (2011 data)
2 Russia 138,000 Company accounts
3 China 98,200 Company accounts
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
-
2
4
6
8
10
12
14
Direct GVA as a % of
GDP
Direct GVA US$billions
PwC 16
Country
Employment
Headcount
Estimation approach
4 Australia 32,300 National sources, Western Australian mining association
5 Indonesia 18,600 Company accounts
6 Tanzania 17,100 Company accounts
7 Papua New Guinea 16,100 Company accounts
8 Mexico 15,700 Company accounts
9 Brazil 14,700 Company accounts
10 Ghana 13,500 National sources, Ghana Chamber of Mines (2011 data)
11 United States 11,100 National sources, United States Census Bureau (2010 data)
12 Peru 9,800 Company accounts
13 Canada 7,200 Company accounts
14 Argentina 5,700 Company accounts
15 Uzbekistan n/a n/a
Total 527,900
Source: PwC analysis based on data from company reports, Thomson Reuters GFMS Mine Economics and Gold Survey 2013, and
various national sources see Appendices 2 and 3 for more detail
The total direct employment in gold mining across the 15 largest gold mining countries is estimated to be
527,900 in 2012. This excludes employment in artisanal and small-scale gold mining.
Three countries stand out: South Africa has an estimated 145,600 gold mining employees, Russia 138,000 and
China is estimated to have 98,200 employees. Gold mining also employs more than 15,000 people in four other
countries: Australia (32,300), Indonesia (18,600), Tanzania (17,100) and Papua New Guinea (16,100).
The United States, Russia and Peru are estimated to have relatively productive mining sectors as they are
ranked as the second, third and fifth countries in terms of the direct GVA impact of gold mining, but are ranked
tenth, eleventh and twelfth respectively in terms of employment.
The average GVA per worker across the top 15 producing countries is estimated to be US$295,000 but varies
from US$841,800 in the United States to US$39,600 in South Africa, where much of the mining takes place
deep underground. Average gold production per head in 2012 was just over 124 ounces of gold per worker
17
.
Gold mining in the top 15 producing countries employed an estimated
527,900 people in 2012
There are two reasons why these employment estimates are conservative. First, as noted, they do not separately
identify those employed in artisanal gold production where production methods are more labour intensive.
Such data as there are suggest that the number of people employed in artisanal production is considerably in
excess of those employed in large scale, formal mining. Second, where the estimates are based on data from
company accounts, productivity (or output per worker) is calculated for a sample of companies. Due to the
challenge of identifying and obtaining these data from small, unlisted companies, there is an inevitable bias
towards publicly listed mining companies. These companies may also be the largest gold mining companies
which are likely to be best placed to realise economies of scale and, therefore, achieve higher levels of
productivity than other, smaller mining companies.
In addition, as with the estimates of GVA, these estimates exclude any indirect or induced employment
attributable to gold mining. Employment multipliers would estimate the jobs supported in the supply chain and
from consumer spending by employees.
17
Including contractors where available.
PwC 17
Artisanal and small-scale mining (ASM)
ASM covers a broad spectrum of activities but it is principally characterised by mining operations which exploit
marginal or small gold deposits, tend to lack capital, are labour intensive and have poor access to markets and
support services
18
.
Although the analysis in this section of the report does not capture all the economic impacts of ASM activities
due to the lack of comprehensive data on the sector, the importance of ASM activities, particularly in low
income and Highly Indebted Poor Countries (HIPCs) is significant. ASM is an important source of livelihoods
for millions. The International Labour Organisation (ILO) estimates that around 13 million people worked in
ASM in 1999 across metal and non-metallic resources. The increase in demand for minerals and metals from a
booming electronics industry and soaring commodity prices have contributed to increased employment in the
sector. Recent ASM employment estimates suggest that the number of artisanal miners is between 20 to 30
million globally
19
.
ASM is estimated to produce around 330 tonnes of gold each year
20
and around 12% of global mine supply. The
level of employment in gold-specific ASM operations is hard to measure but some estimates suggest those
employed in ASM mining operations as a whole may be as many as 10 times the number employed in large-
scale mining operations
21
. If the same factor were to be applied to gold-specific ASM operations then this would
imply employment of more than 5 million worldwide in gold-specific ASM operations.
Some studies have estimated that ASM gold miners typically earn between US$5 and $15 a day
22
- much higher
than the national average for poorer nations. If we assume that such workers are paid US$10 a day on average,
the total value of earnings of workers in the gold ASM sector could amount to approximately US$12.5 billion
annually
23
.
ASM is important for the economically vulnerable and is likely to continue to provide livelihoods for millions
worldwide. The sector faces some key challenges, including weak controls and regulations, poor social and
environmental practices, the use of child labour and smuggling of gold involving criminal networks. Much
remains to be done in order to formalise ASM and to improve labour conditions and environmental protection
in the sector, as well as to understand the true scale, nature and contribution of ASM activities.
Investment in gold mining
Another measure of the economic contribution of gold mining is the level of capital investment (capex) made by
companies operating in the sector. It can be seen as a forward looking indicator of GVA. It should not, however,
be seen as additional to GVA as some of the resources used to fund capex (notably retained profits) are already
captured in the calculation of GVA.
Table 6 shows the amount of capex recorded by those mines operating in each of the top 15 gold producing
countries for which capex data are reported. The estimates distinguish between ongoing capex spending to
maintain existing operations - and expansion capex spending used to expand current operations or develop
new operations.
In 2012, investment by the subset of gold mines reporting their capex was US$17.7 billion. This amount will
understate total capex in gold mining as not all mines report their capex
24
. In particular, the coverage of capex
by gold mines in China is very limited. Despite high production levels, investment reported by mining
companies operating in China is small in both 2012 and preceding years.
The countries with the largest reported gold mining capex in 2012 are Canada (US$2.6 billion), the United
States (US$2.5 billion) and Australia (US$2.3 billion). The level of investment is broadly spread across
countries, with all except China and Tanzania recording capital expenditure of greater than US$500m in 2012.
18
IIED (2002) Artisanal and small-scale mining, Chapter 13 in Breaking NewGround: Mining, Minerals and Sustainable Development,
International Institute for Environment and Development.
19
Hruschka, F. and Echavarria, C. (2011) Rock solid chances for responsible artisanal mining, ARM Series on Responsible ASM No. 3,
Alliance for Responsible Mining, January 2011.
20
http://artisanalgold.blogspot.co.uk/2011/06/world-artisanal-gold-production.html.
21
Siegel, S. and Viega, M.M. (2010) The myth of alternative livelihoods: artisanal mining, gold and poverty, International Journal of
Environment and Pollution 41(3/4): 272288.
22
ibid
23
Assuming 250 working days a year.
24
This differs from the mine production figures sourced from the same database which appears to be comprehensive, based on comparison
with alternative sources, such as the US Geological Survey.
PwC 18
Total capex by those companies reporting this information has risen by 83% since 2007 across the top 15 gold
producing countries.
Table 6: Investment in gold production in major gold producing countries (US$ millions, 2012)
25
Country Ongoing capital expenditure Expansionary capital
expenditure
Total capital investment
1 Canada 395 2,230 2,624
2 United States 1,232 1,265 2,498
3 Australia 855 1,458 2,313
4 South Africa 1,035 759 1,795
5 Russia 250 1,521 1,771
6 Ghana 428 951 1,379
7 Brazil 196 815 1,010
8 Argentina 144 648 791
9 Mexico 189 583 773
10 Indonesia 669 103 772
11 Peru 201 560 760
12 Papua New Guinea 312 417 729
13 Tanzania 187 202 389
14 China 29 103 132
15 Uzbekistan n/a n/a n/a
Total 6,122 11,615 17,737
Source: Thomson Reuters GFMS Mine Economics
Exports of gold
For some countries, gold mining is a significant source of exports and, therefore, foreign exchange earnings.
Table 7 shows the value of gold exports from each of the top 15 gold producing countries in 2012. The largest
exporters are at the top of the list.
In 2012, gold accounted for 36% of all Tanzanian merchandise exports,
26% of exports in both Ghana and Papua New Guinea and 21% of
Peruvian exports
The value of exports is reported in Table 7. These figures are taken from UNCTADs Trademap database and
have been compared with those reported by the national statistical agencies to ensure they are consistent. They
do, however, need to be interpreted with care. Gold is a highly-traded commodity, and many countries import
and export large quantities of gold at different stages of the fabrication process, independently of mining it. This
means that data on export volumes and values do not always reflect mine production for some countries.
Table 7: Exports of gold by major gold producing countries (2012)
26
Country Exports
US$ millions
Share of value of national merchandise exports
%
1 United States 33,730 2.2
2 China
27
22,890 1.1
3 Australia 16,000 6.1
4 Canada 15,340 3.4
5 Peru 9,620 21.4
6 South Africa 8,700 9.9
7 Mexico 7,990 2.2
25
The figures shown are the sum of ongoing capital expenditure and expansion capital expenditure.
26
Data for Indonesia, Ghana, Uzbekistan, Papua New Guinea, Argentina and Tanzania refer to 2011.
27
Data on total Chinas merchandise exports are sourced from the National Statistical Agency as figures from UNCTAD were not available.
PwC 19
Country Exports
US$ millions
Share of value of national merchandise exports
%
8 Russia 5,130 1.0
9 Ghana 4,840 26.3
10 Brazil 2,660 1.1
11 Argentina 2,330 2.8
12 Indonesia 2,220 1.1
13 Papua New Guinea 2,180 26.2
14 Tanzania 1,718 36.3
15 Uzbekistan 149 2.5
Total 135,497
Source: UNCTAD Trademap, PwC analysis
The United States and China are the two largest exporters, with export earnings in 2012 of US$33.7 billion and
US$22.9 billion respectively, although these figures are inflated by trading. For a number of the other countries,
gold represents a large share of total merchandise exports: in 2012, gold exports were 36% of all Tanzanian
exports, 26% of exports in both Ghana and Papua New Guinea and 21% of Peruvian exports.
Some care is needed in interpreting the export data as several apparent discrepancies were noted when
reviewing the trade data collated by UNCTAD. For example, comparing data on the value and volume of gold
exports allows an implied unit value to be derived. In Mexico, Argentina and Peru, this implied unit value of
gold is significantly less than the world gold price in the same year
28
(in the other leading producing countries,
the implied value is close to the world gold price). Furthermore, the lower unit value of exports in these three
countries is not consistent with the selling price by a sample of producers in the countries which show sales
values close to the world price of gold. These apparent discrepancies may reflect several factors:
Data integrity issues: for example, it has been suggested that since gold is often traded alongside silver it
may have been coded and valued so as to reflect the combination of gold and silver;
The influence of artisanal gold production; and
The impact of foreign exchange controls.
Fiscal impacts
As part of a large sector of the economy that generates substantial economic output and employment, gold
mining companies also provide government revenues in the countries where they operate. Gold mining bears a
number of additional taxes and royalties as well as the taxes paid on employment and profits which are
common to most sectors in the economy. This part of the section focuses on these specific royalties and taxes.
Following consultations with PwC mining tax experts in each of the 15 gold producing countries, the types and
levels of specific taxes levied on the gold mining sector have been identified. They are summarised in Table 8.
The table includes only those taxes that are specific to gold mining; other taxes, such as corporate income taxes
and employment taxes are not included. The table shows that the most commonly applied specific tax is mining
royalty which is typically levied as a percentage of turnover to reflect resource use. The other common tax is the
licence fees required for exploration or when setting up a mine.
Table 8: Summary of mining royalties and other mining taxes in the top 15 gold producing countries
Mining tax
29
Export tax Other mining
based taxes
30
Other fees
Argentina Mining royalty
Provincial
3%
Mine-head value
5.0% on ore
5.0% -10.0% on
refined metal
No Licence fee
Australia Mining royalty No No Licence fee
28
London Bullion Market Association, London PM fix.
29
Data are provided in the following order: name of tax, level of tax (federal, state and provincial), tax rate, tax base.
30
Other taxes refer to other significant product based taxes on mineral extraction other than royalties or fees, such as sales taxes and taxes
that are not mining taxes per se but constitute significant tax payments for mining companies.
PwC 20
Mining tax
29
based taxes
30
Other fees
State
0%-5.3%
Volume of mineral extracted
Brazil Compensation for the exploitation of mineral resources
Federal
1.0%
Adjusted revenue
No ICMS
31
PIS/COFINS
32
License fee
Canada Mining taxes
Province
2.0% to 16.0% depending on province
Adjusted PBT
No No License fee
China Resource tax
Federal
RMB 1.5 RMB
7 per tonne
Weight
Compensation
for mineral
resource
Federal
0.5% - 4.0%
Revenues
Royalty fee for
exploration right
Federal
Depends
33
Area
No universal
export duty, but
could be charged
based on
Harmonised
System Code
VAT on sales at
17%
Local surcharges
on VAT at 4.0% to
12.0%
Licence fee
Ghana Mineral royalty
Federal
5.0%
Turnover
No No Licence fees
Deadrent
Dividends to government
Ground rent
Annual Mineral Rights fee
Indonesia Government royalty
Federal
3.8%
Revenue
No No Licence fees
Deadrent
Land and building tax
Mexico No No Flat tax. Federal.
17.5%. Income
less cost
Licence fees
Papua New
Guinea
Mining royalty
Federal
2%
Revenue less direct costs of
sales
Mineral resources
authority level
Federal
0.25%
Turnover
No No Application fee for
licences
Sundry other fees
Peru Mining royalty
Regional
1.0%-12.0%
Profit before tax
Special mining
tax
Federal
2.0% - 8.4%
Profit before tax
Special mining
contribution
Federal
4.0% - 13.12%
Profit before tax
No No Licence fees
Russia Mineral resources extraction tax Tax applied on No Licence fees
31
ICMS is an indirect tax similar to VAT which is applied at State level. The rates vary according to where the product/good/mine is being
sold depending on the specific state legislation. It is levied on domestic sales and charged on the price of the mineral.
32
PIS and COFINS are Federal social contribution taxes due by all entities in Brazil on domestic sales (i.e. not restricted to mining
companies) and calculated based on gross revenues. There are two different regimes applicable for PIS and COFINS: the non-cumulative
and the cumulative regime. Under the first one, the tax rate 9.25% (1.65% PIS and 7.6% COFINS), but taxpayers may calculate credits upon
some inputs and expenses allowed in tax legislation; Under the cumulative regime, no tax credits are allowed, but the rate is inferior, 3.65%
(0.65% PIS and 3% COFINS).
33
The Royalty Fee for Exploration Right is RMB 100/annum/km for the first three years and an additional RMB100/annum/km from the
fourth year, with a ceiling of RMB500/annum/km. There are incentives for Foreign Invested Enterprises exploring mineral resources in
Western China region: a 1-year exemption followed by a 2-year 50% reduction for Sino-Foreign joint projects. The Royalty Fee for
Exploitation Right is RMB 1,000/annum/km. There are incentives for Foreign Invested Enterprises exploiting mineral resources in
Western China region: a 1-year exemption followed by a 2-year 50% reduction for Sino-Foreign joint projects. A further 4-year 25%
reduction on projects is available where advanced/new technology is deployed to enhance the utilisation rate.
PwC 21
Mining tax
29
based taxes
30
Other fees
Federal
6.0%
Value of extracted mineral resource
ores
South Africa Mining and petroleum resources royalty
Federal
0.5% - 5.0%
Adjusted revenues
No No Licence fees
Tanzania Government mining royalty
Federal
4.0%
Market value
No No Licence fees
Deadrent
Service levy
United
States
Nevada net proceeds tax
State
2.0% - 5.0%
Adjusted profit before tax
Other state severance taxes
State
2.0% - 5.0%
Adjusted profit before tax
No No No
Uzbekistan Royalty
Federal
5.0%
Units produced at weighted average sales price
No No Signing bonus
Commercial discovery
bonus
Source: PwC (2012) Corporate income taxes, mining royalties and other mining taxes: a summary of rates and rules in selected
countries, June 2012
Although Table 8 shows the type and range of specific taxes faced by gold mining companies, it does not
provide the value of the actual payments made by them to governments. Research in each of the 15 gold
producing countries to establish the availability of official statistics on specific tax payments made by gold
mining companies indicates that such data are publicly available only in Russia, Brazil and South Africa.
Moreover, in these countries, the data only include mining royalties. To the extent that other data are available,
they cover the broader mining sector, not just gold mining.
In the absence of specific data for gold mining in most countries, estimates of the mining royalties for which
gold producers are potentially liable are shown in Table 9. These values are calculated using information from
PwC tax experts and the royalty rates reported by Thomson Reuters GFMS Mine Economics and the total
production estimates presented in Table 4. To the extent that gold producers do not pay all their liabilities,
these estimates will overstate the actual payments made to governments.
Based on these figures, the greatest liability for mining royalties occurs in China and Russia, at US$1,398
million and US$797 million respectively. Both countries have relatively high royalty rates, on a per ounce basis,
and high levels of gold production. It is estimated that the combined mining royalty liabilities in 2012 across all
15 countries was US$4.1 billion.
These estimates can be compared to the government royalty data for Russia, Brazil and South Africa to test the
appropriateness of the approach taken. The Russian tax authorities reported that gold mining royalties paid
were US$681 million in 2012
34
, below the estimate of US$797 million. In South Africa, the reported revenue of
US$111 million
35
is close to the estimated liabilities of US$118 million. The government data are on a fiscal year
basis so are not completely comparable to the calendar year estimates in Table 9. There is, however, a bigger
proportionate discrepancy in Brazil. Official statistics report gold mining royalties of US$17 million in 2012
36
which is less than half the estimated liability of US$49 million. These results suggest that the individual country
tax estimates should be treated as indicative only.
34
Russian Federal Tax Service, http://www.nalog.ru/nal_statistik/forms_stat/.
35
South Africa National Treasury and South African Revenue Service, 2012 Tax Statistics.
36
Brazilian Ministry for Mineral Production,
https://sistemas.dnpm.gov.br/arrecadacao/extra/Relatorios/arrecadacao_cfem_substancia.aspx.
PwC 22
Table 9: Estimated liability for mining royalties by country (2012)
Country Royalty rate (US$/oz) Total royalty liability (US$ million)
1
China 105.2 1,398
2
Russia 107.8 797
3
Australia 48.0 386
4
United States 35.8 266
5
Ghana 76.0 234
6
Peru 38.0 226
7
Argentina 114.5 201
8
Indonesia 43.2 124
9
South Africa 20.6 118
10
Tanzania 67.0 106
11
Mexico 22.3 68
12
Papua New Guinea 33.4 61
13
Brazil 22.5 49
14
Canada 8.6 30
-
Uzbekistan - -
Total 4,063
Source: Thomson Reuters GFMS Mine Economics and Gold Survey 2013, PwC estimates
The work to date has highlighted a lack of consistent official statistics on the contribution of gold mining
companies to the public finances in the countries in which they operate. Whilst the liability for mining royalties
can be estimated as shown above, other mining specific taxes and payments are much harder to estimate. In
many cases gold mining related fees are determined on a case-by-case basis and, therefore, cannot be generally
estimated.
Moreover the taxes paid by a mining operation will vary significantly across its lifetime. Thus, during
exploration, permitting and project development stages lasting up to seven to ten years, there will be a
significant outflow of investment funds and tax liabilities will be limited. Once the mine begins production, it
will be liable for royalty payments and excise duties but it will need to have recovered its initial investment
before it becomes liable to corporate income taxes after which its fiscal contribution will tend to escalate.
As noted, gold mining companies are also liable to other taxes, such as corporate income taxes. These often
have complicated rules for calculation which depend on the specific circumstances of each mining company.
Again, this makes reliable estimation difficult. Nonetheless, some sense of the overall scale of the contribution
of gold mining companies to the public finances can be gained from several sources:
Data published by two of the largest gold mining companies (see Box 2);
Data from EITI reports for Tanzania and Ghana (see Box 3): Indonesia and Peru are also EITI members;
and
A PwC survey of the total tax contribution of the mining industry in 2009 (see Box 4).
These sources indicate that, for the two companies considered, royalties are only a relatively small proportion of
the taxes paid. Likewise, in the case of Tanzania and Ghana, the evidence shows the importance of the gold
mining sectors fiscal contribution is significant.
PwC 23
Box 2: Company case studies - tax payments by Newmont and Goldcorp
Newmont Mining Corporation is one of the largest gold mining companies in the world with gold mines in
the United States, Ghana, Peru, Indonesia, Australia and New Zealand. It has published on its website details of
the amount of total taxes that it pays per ounce of gold produced for the year ended 31 December 2011. Also
shown is the amount of gold produced in each country where it operates. Newmont does not identify the taxes
included in the total tax per ounce calculation, but these are likely to include some or all of the taxes shown in
Table 10. As the table shows, the total tax per ounce is several times greater in all countries than the royalty per
ounce.
Table 10: Newmont Mining Corporations estimated tax payments
Country Gold
produced
37
Tonnes
Total
tax
US$/oz
Total tax
US$ millions
Share of
country
production
38
%
Royalty
US$/oz
Taxes
Australia 57.4 198.4 366 25.5 48.0 Licence fees, royalties, resource rents,
corporate income tax, employment
taxes, fuel excise duty, GST, council
rates, mining taxes, withholding taxes
Ghana 17.6 281.3 159 19.3 75.9 Licence fees, royalties, resource rents,
corporate income tax, employment
taxes, social security, fuel duties,
customs duties, business rates,
withholding taxes, sales taxes
Peru 40.2 145.3 188 21.4 38.0 Licence fees, royalties, resource rents,
corporate income tax, social security,
sales tax, withholding taxes,
employment taxes
United
States
54.2 251.7 438 23.3 35.8 Licence fees, federal and state corporate
income taxes, social security,
employment taxes, sales taxes, property
taxes, severance taxes
Source: PwC analysis
Goldcorp is one of the worlds largest gold producers with operations and development projects located
throughout the Americas. While its main product is gold, it also produces silver, copper and lead. From the 15
gold producing countries in scope, Goldcorp has mines in Canada, the United States and Mexico. Goldcorp
published its total tax contribution for 2011 by country as shown in Table 11. Although Goldcorp does not
publish the name of the taxes included in its total tax contribution, the table suggests the taxes expected to be
paid by a mining company in the relevant countries.
Table 11: Goldcorp's total tax contribution
Country Gold
produced
39
Tonnes
Total
tax
US$/oz
Total tax
US$ millions
Share of
country
production
40
%
Royal
ty
US$/o
z
Taxes
Canada 35.4 170 225 32.9 8.6 Licence fees, federal and state corporate
income taxes, social security,
employment taxes, sales taxes, property
taxes, severance taxes
United
States
5.3 113 25 2.3 35.8 Mining taxes, provincial profit taxes,
employment taxes, social security, sales
taxes, property taxes, business rates,
fuel excise duty, withholding taxes
Mexico
41
21.5 639 442 24.3 22.3 License fees, resource rents, Corporate
income taxes, employment taxes, social
security, property taxes, sales taxes,
aggregates levy, excise duties,
withholding taxes.
37
http://www.beyondthemine.com/2012/.
38
39
http://csr.goldcorp.com/2011/3_contributions.php.
40
41
These figures include a mine sold by Goldcorp and also activities in Guatemala.
PwC 24
Box 3: Country case studies Tanzania and Ghana
The Government of Tanzania does not publish data on the revenues it derives from the mining industry, or
from gold mining specifically.
Two of the largest gold mining groups operating in Tanzania do however publish their total tax contribution.
This gives an indication of the total fiscal contribution to the Tanzanian public finances by the gold mining
sector. These figures are shown in Table 12 for 2011.
Table 12: Total tax contribution of largest Tanzanian gold miners (2011)
Group Gold production
Tonnes
Share of country
production
42
%
Total tax
(US$ millions)
African Barrick Gold 21.4 43.2 135.5
AngloGold Ashanti 15.4 30.1 101.1
Source: http://www.anglogold.com/NR/rdonlyres/B40A0B49-FFF9-43B6-820B-C196B1AF41C1/0/Tanzania.pdf, African Barrick Gold
Annual Report 2011
African Barrick Gold and AngloGold Ashanti between them paid US$236.6m in taxes and other payments to
government in 2011 and accounted for 73.3% of gold produced in Tanzania. This compares with the estimated
liability for mining royalty of US$102.5m shown in Table 9.
Tanzania is a member of the EITI. The EITI data for Tanzania cover 19 taxes
43
. The companies total tax
contribution may, however, include other taxes.
The most recent EITI report for Tanzania, which covers the year to 30 June 2010, shows that gold mining
companies made payments to government of US$194m. While not covering the same period as the company
data in Table 9, this suggests that the TTC is larger than the company taxes covered by the EITI.
According to a report published by the Ghana Chamber of Mines based on data from the Ghana Revenue
Authority, the mining sector contributed around US$646 million in taxes, equivalent to 28% of total tax
revenues and 38% of total company taxes
44
in 2011. Moreover, revenues from gold mining also accounted for
the overwhelming share of total mineral revenues in 2011 (97% or US$4.6 billion).
EITI reports for Ghana are available for the years 2010 and 2011
45
. They include only certain payments, namely
payments for mineral rights licences, ground rent, property rates, mineral royalties, corporate tax and
dividends paid to government. As for Tanzania, there are other taxes that will be paid by mining companies that
are not covered by the EITI.
Of the 11 companies covered by the EITI in Ghana, nine are gold mining companies. Between them these nine
companies paid US$182 million in 2010 and US$439 million in 2011. The majority of the increase appears to
come from corporate income taxes. The EITI report suggests that this may be due to the end of the initial
investment recovery periods for major producers as well as higher prices.
Box 4: Total tax contribution of mining industry
A PwC Total Tax Contribution survey of the mining industry in 2009 showed that for the participating
companies, royalties, licence fees and resource rents together made up 16% of the Total Tax Contribution on
average, while mining specific taxes made up just 5%. The rest of the tax contribution was made up from a
range of taxes including taxes on property, employment, sales, customs duties and corporate income taxes.
Although this study looked at all mining companies, not just gold producers, this suggests that the contribution
of mining companies to public finances is considerably greater than just mining royalties.
42
43
http://eiti.org/files/Tanzania-2010-EITI-Report.pdf.
44
Includes corporate income tax, withholding tax and levies.
45
http://eiti.org/report/ghana/2011.
PwC 25
Recycling of gold
Recycled gold refers to gold sourced from previously fabricated products that is subsequently refined back into
bars.
The list in Table 13 shows the top source countries of recycled gold. The United States and Italy are the top two
sources of recycled gold followed by China and India. The recovery of gold from previously fabricated products
destined for recycling is more likely to occur in countries with high gold consumption as this provides a ready
source of material and, as a result, gold recovery activity is not tied to geological conditions in the same way as
mine production.
Table 13: Supply of gold for recycling (tonnes, 2012)
Country Recycled gold supply
1 United States 129
2 Italy 123
3 China 120
4 India 113
5 United Arab Emirates 73
6 Turkey 72
7 United Kingdom 69
8 Mexico 63
9 Egypt 54
10 Indonesia 49
Total 864
World 1,616
Source: Thomson Reuters GFMS Gold Survey 2013
Recycled gold is a significant source of gold supply. It generated 1,616 tonnes of gold supply in 2012, or 37% of
the global supply of gold. The output of recycled gold has increased by 60% since 2007, when the global total
was 1,005 tonnes. This supply response has been far more significant than in mine production, where
development lead times and other barriers limit rapid responses.
The supply of gold from recycling has increased by 60% since 2007:
production has increased from 1,005 tonnes in 2004 to 1,616 tonnes in
2012
Data limitations mean that the value added by gold recycling cannot be estimated as easily and with the same
degree of confidence as that associated with gold mining. There are two key uncertainties. First, whilst the data
in Table 14 show where recycled gold is recovered from previously fabricated products, it does not provide an
indication of where the subsequent refining of recycled gold takes place. This is where most of the value added
of gold recycling is generated. The lack of data on where recycled gold is refined rules out further analysis at a
country level.
The potential value added by global recycling is, therefore, analysed at the global level. This is done by
estimating the market value of gold produced by recycling (effectively turnover) and then estimating the
proportion of this turnover which is value added using data from the World Input-Output Database.
The second uncertainty concerns the proportion of recycling turnover which is GVA. There is no specific
turnover/GVA ratio for gold recycling available for any country, much less at the global level, so the global
average ratio for recycling in general is used instead. This estimate is indicative as it is not known whether this
ratio is an accurate representation of gold recycling activities. It is also recognised that gold recycling would
involve some component of fabrication. To reflect this uncertainty, the turnover/GVA ratio for the global
manufacturing sector is also used to estimate GVA.
The estimated GVA of global gold recycling activity is presented as a range in Table 14. The lower bound is
estimated using the turnover/GVA ratio for the manufacturing sector globally. The upper bound is estimated
using the turnover/GVA ratio for the recycling sector globally.
PwC 26
Table 14: Estimated turnover and GVA of global gold recycling (US$ million, 2012)
Turnover GVA
Lower bound based on the global
manufacturing sector ratio
Upper bound based on the global
recycling sector ratio
World 86,718 23,429 27,576
Source: PwC analysis using data from Thomson Reuters GFMS Gold Survey 2013, the World Gold Council, World Input-Output Database
(WIOD) and national statistical offices
The GVA estimates for global gold recycling ranges from US$23.4 billion to US$27.6 billion. The value added
per tonne of recycled gold using the average of the lower and upper bound estimates is approximately US$15.8
million. This is in contrast to the value added per tonne of gold produced from mines, which is approximately
US$36.0 million. This implies that more economic value per ounce is added by mining gold than by recycling it.
PwC 27
Demand for gold
Introduction
The uses of gold are wide-ranging and well-documented. In addition to its value as an investment, the physical
appearance and properties of gold lend themselves to its use in jewellery and for various
technological/manufacturing uses. For example, in many developing countries, gold jewellery is not only
perceived as an adornment but also as an effective savings vehicle. Its unique properties make it a key input in
the manufacture of electronic goods and telecommunications devices, health care and dental equipment,
nanotechnology and high-tech engineering.
Global gold demand rose by around 42% between 2007 and 2012, peaking in 2011 at 4,582 tonnes. The
breakdown of global gold demand in 2012, which is shown in Figure 6, contains four key elements:
Central bank purchases which account for 12% of demand;
Investment demand (which consists of total bar and coin and gold-backed ETFs and similar products
46
);
Jewellery which accounts for the largest proportion of gold demand; and
Technology/manufacturing, which includes uses such as in electronics and dentistry, accounts for around
10% of gold demand.
The rest of this section considers each of these uses in turn.
Figure 6: Global gold demand
47
(tonnes, 2012)
Source: World Gold Council
Central bank purchases of gold
Gold is an important reserve asset for central banks and investors. Gold accounts for around 12% of the value of
total reserves in 2012 globally on average
48
. Central banks around the world are, therefore, important sources of
demand for gold: net official sector purchases
49
amounted to 535 tonnes of gold or 12% of global demand.
The value of gold is resilient to inflation, and allows central banks to hedge effectively against currency
fluctuations caused by economic and monetary policies. A recent study by the World Gold Council also
46
A final component of investment demand consists of OTC investment and stock flows which is partly a statistical residual. These largely
reflect demand in the opaque over-the-counter (OTC) market, with an additional contribution occasionally from changes to fabrication
inventories.
47
Refers to gold consumption, not fabrication.
48
World Gold Council, 13 March 2013.
49
Central bank net purchases are gross purchase of gold less gross sales by central banks and other official institutions. They exclude swaps
and the effects of delta hedging.
Jewellery,
1,908 tonnes, 43%
Total bar & coin,
1,256 tonnes, 29%
Official sector
purchases, 535
tonnes, 12%
Electronics,
303 tonnes, 7%
ETFs & similar,
279 tonnes, 6%
Other Industrial,
86 tonnes, 2%
Dentistry,
40 tonnes, 1%
PwC 28
concluded that gold is an attractive alternative in the strategies of central banks to diversify their reserve
assets
50
.
Whilst the economic significance of these purchases is not considered further as part of this study, it is
acknowledged that gold is valuable to central banks and investors, not only because it plays a key role in
portfolio diversification, but also because its value is resilient to macroeconomic shocks that would otherwise
undermine the value of currency reserves. It can be effectively deployed to maintain liquidity during periods of
economic turbulence. The low correlation between gold and movements in key currencies and its strong inverse
correlation with the US dollar
51
make it an ideal investment for hedging against risk.
Investment
Gold is an important investment asset and savings vehicle for many. In 2012, demand for gold for investment
purposes represented over one third of global demand. It includes demand for physical bars and coins, gold-
backed ETFs and similar products and over the counter (OTC) investment and stock flows. Figure 7 shows the
breakdown of gold investment demand for 2012. While it is acknowledged that gold plays an important role as
an investment asset and in portfolio diversification strategies, the economic value of this role is not discussed
further here as the World Gold Council is carrying out separate studies in this area
52
.
The focus of the rest of this report is on the economic impact of fabricating (and consuming) small bar and coin
and other uses of gold.
Figure 7: Breakdown of demand for gold for investment purposes (2012)
Source: World Gold Council
50
World Gold Council (2013) Central bank diversification strategies, rebalancing from the dollar and euro, February 2013.
51
O Connor, F. and Lucey, B. (2012) Golds Currency Characteristics and its negative relationship with the US Dollar, Alchemist Issue 66.
52
Physical bar
demand,
941 tonnes, 61%
Official coin, 201
tonnes, 13%
Medals/imitation
coin, 113 tonnes, 8%
ETFs & similar
products,
279 tonnes, 18%
PwC 29
Gold fabrication and consumption
Table 15 shows the top 13 gold consuming countries in 2012. An important distinction can be drawn between
demand for gold for fabrication and for (final) consumption. Fabrication covers the first transformation of
gold bullion into a semi-finished or finished product
53
whereas consumption refers to the end use of gold
(whether in the form of jewellery or investment products such as bars and coins) by the final consumer.
Table 15: Major gold consuming countries (tonnes, 2012)
Country Fabrication demand
(Jewellery, bar and coin and technology)
Consumption demand
(Jewellery and bar and coin only)
1 India 942 864
2 China 840 784
3 United States 147
54
162
4 Turkey 113 110
5 Thailand 95 81
6 Vietnam 76 77
7 Russia 70 70
8 Indonesia 58 52
9 Saudi Arabia & Yemen 49
55
62
56
10 Switzerland 45
57
81
11 Egypt 38 48
12 Germany 37
58
110
13 United Arab Emirates 35 59
Total 2,544 2,560
World 3,611 3,164
Source: World Gold Council, Thomson Reuters GFMS Gold Survey 2013
The current analysis captures the value attributable to gold during both the fabrication process and subsequent
retail activity, particularly for jewellery. The complexity of the value chains into which gold is an input allied to
a lack of data on the consumption of those manufactured goods which use gold as an input precludes further
analysis on the GVA of the retail activity of these manufactured goods. Although some sector-level GVA
estimates in national accounts express the value added of retail activity for specialist stores such as electronic
goods stores, these estimates do not capture the value of goods which are sold in non-specialised stores such as
department stores and other general retailers. In addition, gold is used in many cases as an intermediate input
in other manufactured goods. For instance, gold is used in the manufacture of electronic components such as
chips and semi-conductors which form the inputs to goods further down the value chain, including electronic
appliances, telecommunications devices and others.
Similarly, for employment, labour force surveys do not typically distinguish employment by the types of goods
sold at different points of sale. Given the complexity in tracking and capturing the value attributable to gold
throughout the value chain and the lack of available detailed data, employment is excluded from this analysis.
Bar and coin
Total bar and coin demand comprises individuals purchases of coins and bars (defined according to the
standard adopted by the European Union for investment gold). It includes demand for coins and small bars (of
1kg or less). In addition to bullion bars and coins, medallions of at least 99% purity (which are prevalent in the
Indian market) are also included. In practice, this includes the initial sale of many coins which are held for their
numismatic value (i.e. coins collected for the purposes of studies or collecting) as well as for their intrinsic
value. It excludes second-hand coins and is measured as net purchases.
Bar and coin demand has surged following the financial crisis: it has grown by 188% since 2007, and accounts
for the largest proportion of total investment demand (82%). This reflects the value of physical bars and coins
53
World Gold Council (2013) Gold Demand Trends: Full Year 2012, February 2013.
54
Data does not include bar and coin fabrication as US not reported separately.
55
Data for gold fabrication presented together for Saudi Arabia and Yemen.
56
Data for Saudi Arabia only.
57
Data does not include bar and coin fabrication as Switzerland not reported separately.
58
Data does not include bar and coin fabrication as Germany not reported separately.
PwC 30
of gold as a key investment asset for many. Gold is a liquid and widely-accepted form of exchange, and is
frequently used as an alternative asset in countries where saving facilities are limited or inaccessible. In
addition, gold offers protection against weak currencies and high domestic inflation which tend to be more
prevalent in low income countries that would otherwise erode the value of cash savings.
Direct GVA associated with the fabrication and sale of gold bars and coins
amounts to US$13.3 billion in the top 13 consuming countries
As data from national governments and international institutions do not typically provide the level of
granularity required to assess the GVA of the fabrication and consumption of gold bar and coin directly, each is
considered separately.
The direct GVA associated with bar and coin fabrication is estimated in two steps. First, the mark-up achieved
by fabricators is applied to the value of the purchases of gold to estimate their turnover. The mark-ups used in
assessing the GVA of bar and coin fabrication are obtained from the financial reports of various government
mints and major gold refiners. Second, the GVA is then estimated by multiplying the estimated turnover by the
share of turnover that is GVA. Turnover/GVA ratios for the manufacturing sector are obtained from national
input-output tables and various industry surveys, which are then applied to turnover to obtain GVA attributable
to gold. In total, the direct GVA associated with the fabrication of gold bars and coins is estimated to be US$13.3
billion across the top 13 consuming countries, led by India, China and Vietnam. Further details on the approach
used can be found in Appendix 2.
The estimates of the GVA derived from gold bar and coin fabrication are shown in Table 16 which covers the top
13 gold consuming countries involved in fabrication of bar and coin. No data on bar and coin fabrication
demand are reported for Egypt and Switzerland (although fabrication is known to occur, especially in
Switzerland). Direct GVA associated with the fabrication and sale of gold bars and coins amounts to US$13.3
billion in the top 13 consuming countries for which we have data, led by China, India and Vietnam (but
excluding Switzerland and Egypt).
Table 16: Direct GVA attributable to gold fromthe fabrication of gold bar and coin (2012)
Country
Fabrication demand
Tonnes
Turnover
US$ millions
Direct GVA
US$ millions
1 China 274 19,328 3,985
2 India 312 22,006 3,879
3 Thailand 78 5,491 1,322
4 Vietnam 65 4,610 1,095
5 Turkey 40 3,821 686
6 United States 28
59
1,560 651
7 Saudi Arabia & Yemen 16 1,577 623
8 Indonesia 22 1,558 579
9 United Arab Emirates 10 958 316
10 Russia 7 364 108
11 Germany 6 303 79
Total 858 61,575 13,324
Source: PwC analysis based on data from the London Bullion Market Association (LBMA), various financial accounts, various national
accounts, World Input-Output Database (WIOD), Thomson Reuters GFMS Gold Survey 2013
An alternative way of estimating the GVA associated with the use of gold in bar and coin involves considering
consumption demand (i.e. by looking at the point where the product is sold to the investor). Again, national
governments and international institutions do not typically provide data at the level of granularity required to
assess the GVA of the consumption of gold bars and coins directly. Instead, the value of sales of bar and coin
(i.e. turnover) is estimated by deriving the average mark-up on the underlying value of the gold achieved for
different bar and coin products. Then, relevant turnover/GVA ratios for the retail sector (which are obtained
59
This figure does not include bar fabrication as US-specific data is not reported.
PwC 31
from national input-output tables and various industry surveys) are applied to turnover to obtain the GVA
attributable to gold. Further details on the approach used can also be found in Appendix 2.
Direct GVA associated with the consumption of gold bars and coins
amounts to US$38.3 billion in the top 13 consuming countries
The estimates of the GVA derived from consumption of gold bar and coin are shown in Table 17 which covers
the top gold consuming countries. Of the top 13 gold consuming countries, no data on bar and coin
consumption demand are reported for Russia. Direct GVA associated with the consumption of gold bars and
coins amounts to US$38.3 billion in the top 13 consuming countries, led by India, China and Vietnam (but
excluding Russia and Egypt).
Table 17: Direct GVA attributable to gold fromthe consumption of gold bars and coins (2012)
Country
Consumption demand
Tonnes
Turnover
US$ millions
Direct GVA
US$ millions
1 India 312 19,712 17,641
2 China 266 15,291 9,192
3 Vietnam 66 3,777 2,238
4 United States 53 3,101 2,211
5 Turkey 48 2,786 2,058
6 Germany 110 6,238 1,270
7 Switzerland 81 4,635 1,127
8 Thailand 78 4,495 1,035
9 Indonesia 22 1,238 734
10 United Arab Emirates 10 547 416
11 Saudi Arabia 15 875 304
Total 1,062 62,813 38,266
Source: PwC analysis based on data from the London Bullion Market Association (LBMA), various national accounts, various gold coin
and bullion dealers, World Input-Output Database (WIOD), Thomson Reuters GFMS Gold Survey 2013
The two estimates of the GVA attributable to gold bar and coin should not be added together. Both approaches
are based on estimating the mark-up on the value of gold in the bar and coin product associated with key
activities in the value chain. The fabrication mark-up, however, is akin to a manufacturing/wholesale mark-up
whereas the consumption mark-up includes the value achieved at the point of sale to the purchaser (the
investor). As Figure 8 illustrates, the fabrication mark-up will be part of the consumption mark-up. The analysis
does not capture the value added attributable to any subsequent transactions in the bar and coin supply chain.
Figure 8: Relationship between fabrication and consumption based estimates of GVA
Fabrication Consumption
Margin attributable to gold
Cost of gold input
Fabrication
Retail mark-
up
World gold price
PwC 32
Jewellery
Jewellery accounts for the largest proportion of gold fabrication and consumption demand. Jewellery demand
covers all newly-made carat jewellery and gold watches, whether plain gold or combined with other materials. It
excludes second-hand jewellery, other metals plated with gold, bars and coins used as jewellery and purchases
funded by trading in existing jewellery.
The direct GVA attributable to gold jewellery fabrication and consumption
for the top 13 gold consuming countries is estimated at US$69.8 billion
Table 18 shows the top 13 gold consuming countries by fabrication and consumption demand for 2012. India is
the top fabricator and consumer of gold jewellery, accounting for nearly one third of global fabrication and
consumer demand. China is the second largest fabricator and consumer of gold. Together, these two countries
account for more than half of global gold jewellery fabrication and consumption demand. Although the physical
volume of gold jewellery consumed has declined by more than 20% since 2007, the value of demand in these
markets has remained relatively resilient compared to other markets in the Middle East and Europe.
Table 18: Gold jewellery fabrication and consumption by country (tonnes, 2012)
Country Fabrication Consumption
1 India 618 552
2 China 498 519
3 United States 54 108
4 Russia 49 70
5 Turkey 74 62
6 United Arab Emirates 25 50
7 Saudi Arabia & Yemen 33
60
47
61
8 Egypt 38 46
9 Indonesia 36 31
10 Vietnam 11 11
11 Thailand 14 3
12 Germany 15 -
13 Switzerland 29 -
Total 1,494 1,498
Global 1,893 1,908
Source: World Gold Council and Thomson Reuters GFMS Gold Survey 2013
As data from national governments and international institutions do not typically provide the level of
granularity required to assess the GVA of the fabrication of gold jewellery directly
62
, an alternative approach is
used. First, the cost of gold inputs is estimated for each country using available data on fabrication demand.
Next, mark-ups are applied to these costs in order to derive estimates of the turnover attributable to gold. The
mark-ups used in this analysis are obtained from various industry and market analysis reports. Turnover/GVA
ratios for the jewellery manufacturing sector are then obtained from national input-output tables and various
industry surveys before being applied to turnover in order to obtain the GVA attributable to gold. Where
jewellery-specific manufacturing data are not available, the turnover/GVA ratio for the manufacturing sector is
applied instead. Further details of the approach used can be found in Appendix 2.
A similar approach is used to estimate the GVA of the retailing of gold jewellery. Rather than using the mark-
ups and turnover/GVA ratios associated with jewellery fabrication, however, the corresponding figures for
jewellery retail sector are used instead.
60
Data for gold fabrication presented together for Saudi Arabia and Yemen.
61
Data for Saudi Arabia only.
62
GVA estimates using international industrial classifications such as NACE Rev. 2 do not disaggregate the manufacture of jewellery by
material type, e.g. platinum, gold, silver etc. In addition, data on GVA are not typically provided on a consistent basis and can vary in levels
of disaggregation across countries.
PwC 33
In summary, the key components of the analysis include:
The fabrication and consumption demand for gold jewellery which provided an indication of the cost of
gold inputs;
The manufacturing and retail industry mark-ups which allowed the estimation of turnover attributable to
gold; and
Turnover/GVA ratios which are used to convert turnover to estimates of GVA attributable to gold.
Table 19 shows the direct GVA attributable to gold jewellery fabrication and consumption for the top 13 gold
consuming countries. The total GVA associated with gold jewellery fabrication and consumption is estimated at
US$69.8 billion. Although China fabricates and consumes less gold than India, its total GVA (the sum of GVA
from jewellery fabrication and consumption) exceeds that of India, primarily due to the lower turnover/GVA
ratio associated with the retail sector (i.e. the lower the ratio, the higher the GVA impact of expenditure).
It should be noted that the fabrication process requires some amount of labour and capital input in order to
transform refined gold into jewellery for sale. Due to the lack of sufficiently granular data on the other cost
components of jewellery fabrication (e.g. labour costs and other capital costs), however, this analysis does not
include the additional value generated by these components that are nevertheless attributable to gold jewellery
fabrication. This value is potentially significant so the estimates presented in Table 19 will be conservative
estimates of the GVA associated with gold jewellery.
Table 19: Direct GVA attributable to gold jewellery fabrication and consumption (US$ millions, 2012)
Country Fabrication GVA Consumption GVA Total GVA
1 China 5,738 23,261 28,999
2 India 8,003 4,845 12,848
3 United States 1,722 7,585 9,307
4 Russia 893 6,336 7,229
5 United Arab Emirates 457 2,500 2,957
6 Egypt 867 1,066 1,933
7 Indonesia 737 1,126 1,863
8 Saudi Arabia & Yemen 751 1,090 1,841
9 Turkey 349 487 836
10 Vietnam 265 431 696
11 Germany 343 - 343
12 Thailand 246 40 286
13 Switzerland 648 - 648
Total 21,018 48,767 69,786
Source: PwC analysis based data from the London Bullion Market Association (LBMA), various financial accounts, various national
accounts, World Input-Output Database (WIOD), S&P Capital IQ, World Gold Council, Thomson Reuters GFMS Gold Survey 2013
Technology
Gold makes an important contribution to many technological/manufacturing applications. Its electrical
conductivity, malleability and resistance to corrosion make it a valuable component in most electronic goods
and equipment. The use of alternative metals such as copper and silver is gaining ground in some areas (notably
in bonding wire) in response to the relatively high cost of gold inputs. Though these alternatives share similar
characteristics to gold, they are imperfect substitutes; often the cost of implementing the required technology to
overcome their shortcomings (particularly regarding corrosion resistance) can limit the cost savings gained
from switching away from gold. The use of gold in electronics has declined from its peak in 2010, mainly due to
price pressures. Nonetheless, gold is not expected to be displaced as the material of choice in many areas. Gold
continues to account for the largest share of bonding wire manufactured on a per metre basis
63
, and it is a
valuable element in high-end applications and safety-critical products such as automotive braking systems and
in medical equipment.
The electronics sector is the largest user of gold for technological/manufacturing purposes by far (accounting
for around 70% of gold in technological/manufacturing fabrications), but gold also plays an important role in
healthcare services and pharmaceutical products due to its biocompatibility and resistance to bacterial
63
Global Semiconductor Packaging Materials Outlook, SEMI, November 2011.
PwC 34
colonisation. New areas of research are exploring the use of gold in cancer treatment and in other biomedical
applications. Gold is also valued for its use in medical diagnostics tools. For example, in 2012, 160 million
malaria testing kits were distributed worldwide, each containing nanoparticles of gold which enable the
accurate and cost-effective diagnosis and treatment of the disease
64
.
Finally, gold is increasingly used in green technologies including in clean energy generation, pollution control
and as catalysts for chemical processes. For example, in the automotive sector, gold is certified for use in vehicle
catalytic converters that catalyse the oxidation of harmful by-products in engine exhausts to reduce the
emission of noxious chemicals into the atmosphere
65
. The use of gold in these industries could become
increasingly significant if future price fluctuations in materials such as platinum and palladium are observed.
While the volume of gold used in new technologies is small, its strategic role in the development of these
technologies is critical and not easily displaced; and any future value added to nascent markets is potentially
significant.
The technological/manufacturing component of demand as defined by the World Gold Council includes all
gold used in the fabrication of electronics, dental, medical, industrial, decorative and other technological
applications including gold destined for plating jewellery
66
.
Technology fabrication demand generates a total of around US$4.0 billion
in direct GVA attributable to the seven countries covered
Table 20 shows fabrication demand for technological/manufacturing purposes by country for 2012. Global
fabrication demand amounted to more than 400 tonnes in 2012, with gold destined for the electronics industry
accounting for the largest share. China is the largest consumer of gold for technological/manufacturing
purposes within the top 13 gold consuming countries listed in Table 15
67
at around 67 tonnes in 2012. This is
followed by the United States with 66 tonnes and Germany and Switzerland both with 17 tonnes. Together, the
countries listed in Table 20 account for around 48% of global technology fabrication demand in 2012
68
.
Table 20: Technology fabrication demand by country (tonnes, 2012)
Country
Electronics
Other industrial and
decorative
Dentistry
Total technology
fabrication demand
1 China 48 - 19 67
2 United States 56 7 3 66
3 Switzerland 5 2 10 17
4 Germany 11 2 3 17
5 Russia 13 2 - 15
6 India 2 - 9 12
7 Thailand - - 3 3
Total 135 13 46 195
World total 285 39 84 408
Source: Thomson Reuters GFMS Gold Survey 2013 and World Gold Council
As before, the approach used in assessing the direct GVA of jewellery and bar and coin fabrication is applied to
technology fabrication demand. The estimated mark-ups are obtained from various industry and market
analysis reports on the manufacture of electronic goods, healthcare equipment and other
technological/manufacturing products. The ratio of turnover to GVA for these sectors is obtained from national
input-output tables and various industry surveys. These are then applied to turnover to estimate the GVA
attributable to gold.
64
World Malaria Report 2012, World Health Organisation, pp37.
65
Catalysis: The accelerator. Nature Volume: 495, pp. S10S11, March 2013.
66
World Gold Council, Gold Demand Trends, Full year 2012.
67
Japan is the worlds largest consumer of gold for technology purposes but is not included in this analysis as its total gold demand does not
place it within the top 13 gold-consuming countries. Other significant gold consumers excluded from the analysis include Singapore,
Taiwan and South Korea.
68
The remaining top 13 gold-consuming countries such as Egypt, Indonesia, Saudi Arabia and Yemen, Turkey, the United Arab Emirates
and Vietnam have not been included in Table 21 as they do not have significant technology fabrication demand to be captured statistically.
PwC 35
Table 21 shows the direct GVA attributable to gold from technology fabrication by country. Technology
fabrication demand generates a total of around US$4.0 billion in direct GVA attributable to gold for the seven
countries where gold is used, with the United States accounting for around 56%.
Table 21: Direct GVA attributable to gold fromtechnology fabrication (US$ millions, 2012)
Country Electronics Other industrial and
decorative
Dentistry Total technology
fabrication
1 United States 62 1,889 308 2,259
2 China 220 423 - 644
3 Switzerland 194 116 40 349
4 Germany 45 223 59 327
5 Russia - 255 39 294
6 India 89 26 - 115
7 Thailand 35 - - 35
Total 646 2,932 445 4,023
Source: PwC analysis based on data from the London Bullion Market Association (LBMA), various financial accounts, various national
accounts, World Input-Output Database (WIOD), S&P Capital IQ, Thomson Reuters GFMS Gold Survey 2013
The current report only considers the economic contribution of gold used in the fabrication of
technological/manufacturing and other goods. It does not capture the value generated by the retail activities
associated with these goods due to the lack of available data on end-use. The retail of electronic goods,
healthcare equipment and other products also potentially generate significant levels of direct GVA. As discussed
earlier, the fact that gold is often an intermediate input to other manufactured goods makes it extremely
difficult to track and capture the value attributable to gold throughout the value chain.
PwC 36
Extending the analysis
As part of the preparation of this report, consideration has also been given to how the analysis might be
extended, either to enhance the robustness of the estimates of the direct impacts or to broaden their scope to
include the indirect, induced and wider economic and fiscal impacts. The key conclusions are summarised
below.
Direct impacts
The analysis of the direct economic impacts can potentially be improved and extended in several ways:
The robustness of the impacts associated with the supply of mined gold can potentially be enhanced
by gathering mine or country level data from mining companies through primary research. Such work
would be especially valuable in improving the quality of the estimates of the impacts on employment and
investment.
Further work could be undertaken to understand better the significance of artisanal gold production.
The estimates of the economic impact of gold recycling can be enhanced by developing a better
understanding of where the refining activity takes place and how much value added is associated with
this process.
There is more scope for strengthening the methods and data used to estimate the impacts associated with
the demand for gold as the nature of the organisations involved and the complexity of the value chains
mean that more challenges need to be overcome. These challenges can potentially be met in several
(complementary) ways:
By undertaking an exercise to identify and analyse the published accounts of companies actively
involved in the different parts of the value chain in the 13 countries which are in scope. Depending
on the scope of the activities covered by these accounts, and the basis upon which they have been
prepared, this could enable better data to be obtained on the value added by these companies.
By undertaking primary research to gather data from samples of producers in each part of the
value chain. Besides covering the elements of value added, such research could also be used to
capture data on employment, investment and exports.
Both these approaches would also enable to scope of the impact measures covered by the analysis to be
extended beyond GVA.
The analysis of the direct fiscal impacts of gold mining can potentially be improved and extended in
several ways:
By gathering mine or country level data on gold specific taxes and other fiscal measures actually paid
by gold mining companies on a country by country basis through primary research. Such work would be
especially valuable in improving the quality of the estimates of the direct fiscal impacts.
By extending the analysis to cover all taxes actually borne (or, possibly, collected) by gold mining
companies. In many cases gold mining related fees are determined on a case by case basis and therefore
cannot be generally estimated. Many other taxes, such as corporate income taxes, have complicated rules
for calculation based on the specific circumstances of each mining company. Again, this makes reliable
estimation impracticable.
In considering these options, it will be important to recognise forthcoming developments in the reporting of tax
payments in the mining sector, notably:
Section 1504 of the Dodd Frank Act in the United States which requires companies registered with the
Securities and Exchange Commission (SEC) to publicly report how much they pay governments for
access to oil, gas and minerals; and
Proposals recently agreed by European Union Member States and the European Parliament as part of the
revised European Accounting and Transparency Directives which will require all EU listed or large
privately owned extractive businesses to publish all payments over 100,000 to every country where they
operate and for each extractive project.
PwC 37
The analysis of the direct fiscal impacts of gold recycling can potentially be extended by undertaking
primary research with the major gold recyclers to gather data on any gold specific taxes that they bear. This
would enable estimates to be generated of the fiscal contribution of gold recycling.
Similarly, the analysis of the direct fiscal impacts associated with gold demand can potentially be extended
by undertaking primary research with the major gold consumers to gather data on any gold specific taxes that
they bear. This will include import duties paid on gold as a raw material and duties on exports of finished or
semi-finished products.
Indirect, induced and wider impacts
The current analysis has focused on the direct economic and fiscal impacts of gold supply and demand. As such,
it excludes the indirect, induced and wider economic and fiscal impacts that arise. These may be significant,
although few existing studies have quantified them to date for gold mining.
Various possible methodologies could be used to estimate the indirect and induced impacts:
Multiplier analysis;
Input-output analysis; and
Dynamic economic modelling (also known as computable general equilibrium modelling).
Each methodology has its strengths and weaknesses, but all are potentially limited by the availability and
quality of economic data related to the supply of and demand for gold (see Table 22).
Table 22: Features of alternative approaches to assessing indirect and induced economic impacts
Multiplier analysis Input-output analysis CGE modelling
Is the data available? Various sets of social accounting matrices and input-output tables exist to allow multiplier analysis, input
output and CGE modelling to be carried out but none isolates the gold related sectors
Who else uses this type of
model?
Widely used in various forms
although analysis tends to be
specific to a particular situation
and, therefore, not flexible
Increasingly being superseded by
CGE models
Used widely by the International
Monetary Fund and World Bank,
especially for fiscal analysis
How useful is the method? Relies on a static view of the
economy so does not easily
capture feedback effects
Generally do not include price
data so do not link key prices in
the economy like gold or wages
Most valuable when projecting
future impacts - extensive
sensitivity analysis generates
richer insights into economic and
fiscal impacts
PwC 38
Appendix 1 Glossary
Central bank net purchases
Gross purchase less gross sales by central banks and other official institutions. Swaps and the effects of delta
hedging are excluded.
Consumer demand
The sum of jewellery and total bar and coin purchases for a country (i.e. the amount of gold acquired directly by
individuals).
Dental
The first transformation of raw gold into intermediate or final products destined for dental applications such as
dental alloys.
Exchange Traded Funds (ETFs) and similar products
Exchange Traded Funds and similar products including: Gold Bullion Securities (London), Gold Bullion
Securities (Australia), SPDR Gold Shares (formerly streetTRACKS Gold Shares), NewGold Gold Debentures,
iShares Comex Gold Trust, ZKB Gold ETF, GOLDIST, ETF Securities Physical Gold, ETF Securities (Tokyo),
ETF Securities (NYSE), XETRA-GOLD, Julius Baer Physical Gold, Central Fund of Canada and Central Gold
Trust, Swiss Gold, iShares Gold Bullion Fund (formerly Claymore Gold Bullion ETF), Sprott Physical Gold
Trust, ETF Securities Glitter, Mitsubishi Physical Gold ETF, CS ETF II (formerly Credit Suisse Xmtch II) and
Dubai Gold Securities.
Fabrication
Fabrication is the first transformation of gold bullion into a semi-finished or finished product.
Jewellery
All newly-made carat jewellery and gold watches, whether plain gold or combined with other materials. It
excludes second-hand jewellery, other metals plated with gold, coins and bars used as jewellery and purchases
funded by the trading in of existing jewellery.
London PM fix
Unless described otherwise, gold price values are based on the London PM fix.
Mine production
Output from large scale, regulated gold mines (i.e. excluding informal or artisanal production).
Net producer hedging
This measures the impact in the physical market of mining companies gold forward sales, loans and options
positions. Hedging accelerates the sale of gold, a transaction which releases gold (from existing stocks) to the
market. Over time, hedging activity does not generate a net increase in the supply of gold. De-hedging, the
process of closing out hedged positions, has the opposite impact and reduces the amount of gold available to the
market in any given quarter.
OTC investment and stock flows
Partly a statistical residual, these largely reflect demand in the opaque over-the-counter (OTC) market, with an
additional contribution occasionally from changes to fabrication inventories.
Physical bar demand
Global investment in physical gold in bar form.
Recycled gold
Gold sourced from previously fabricated products which has been recovered and refined back into bars.
Technology
This captures all gold used in the fabrication of electronics, dental, medical, industrial, decorative and other
technological applications, with electronics representing the largest component of this category. This includes
gold destined for plating jewellery.
Tonne
1,000 kg or 32,151 troy ounces of fine gold.
PwC 39
Total bar and coin demand
This comprises individuals purchases of coins and bars, defined according to the standard adopted by the
European Union for investment gold, but includes demand for coins and bars in both the western and non-
western markets. Medallions of at least 99% purity, wires and lumps sold in small quantities are also included.
In practice this includes the initial sale of many coins destined ultimately to be considered as numismatic rather
than bullion. It excludes second-hand coins and is measured as net purchases.
Total investment
Represents the amalgamation of all components of investment demand, including all demand for physical bars
and coins, demand for ETFs and similar products, and OTC investment and stock flows.
PwC 40
Appendix 2 Methodology
Introduction
This Appendix explains the basis for the analysis of the direct economic and fiscal impacts presented in this
report. It describes the data sources which have been used as well as the estimation methods which have been
applied. The first part of the Appendix covers the supply of gold and the second part addresses gold fabrication
and consumption demand.
Supply of gold
Mine production
The direct economic and fiscal impacts of gold mining have been estimated at country level for each of the 15
largest producing countries.
Direct gross value added (GVA)
The GVA of gold mining is a measure of the value added through the economic activity of gold mining
companies. It can be calculated using one of two approaches:
The income approach, which calculates the sum of (gross) operating profit, employee costs and
amortisation and depreciation; and
The production approach, whereby GVA is the revenue from gold mine production less intermediate
consumption (i.e. the cost of inputs and raw materials directly purchased).
The estimates of value added of gold mine production in this report using the income approach are generated as
follows:
= + + +
Where:
=
= ( % )
+ = ( % )
The revenue estimates are generated by multiplying mine production (taken from Thomson Reuters GFMS
Gold Survey 2013) by the world price for gold, based on the London Bullion Market Associations PM fix gold
price. Data from Thomson Reuters GFMS Mine Economics on mine production costs, employee costs, and
depreciation and amortisation are provided on the basis of US dollars per ounce of gold produced. These are
multiplied by mine production of gold for each country to estimate employee costs and depreciation and
amortisation.
Employment
The employment supported by gold mines is an alternative measure of economic contribution to GVA. As with
GVA, data from national governments and multilateral institutions do not provide sufficiently granular
information to identify the number of people employed in gold mining, so it is necessary to estimate the figures.
Two different sources are used to estimate national employment (including contractors) in gold mining:
National sources of gold mining employment: these include national chambers of mining, other
trade associations and national statistical offices; and
Company level data: company level data are used to estimate the average productivity of gold mines in
each producing country.
Data on the broader mining sector are often available from government sources. These include employment
data for the broader mining sector which are used to provide an upper bound for gold mining employment as
well as the basis for a benchmark for mine productivity.
In most cases, company level data are used to generate employment estimates. Estimates of company-level
GVA per worker are then combined with national GVA estimates for gold to generate country-level employment
PwC 41
estimates. Where available, contractors are also included in these estimates. Table 23 provides more details on
the approach used for each country.
Table 23: Source of employment estimates
Country Estimation
approach
Sources Note
South
Africa
National sources South Africa Chamber of Mines
Data from 2011 on gold mining employment.
Russia
Company
accounts
Polymetal International plc Annual
Report 2011, Polyus Gold
International Annual Report 2011
Financial and employment data from three companies covering 11
mines produce 25% of national production are used to estimate
company-level GVA per worker.
China
Company
accounts
Zhong Jin Gold Mining Group Annual
Report 2011
Production and employment are obtained for Zhong Jin which
accounts for 28% of Chinese mine production.
Australia National sources
Department of Mines and Petroleum
(Government of Western Australia),
Australian Bureau of Agricultural and
Resource Economics and Sciences
Data on employment by gold mining companies in Western
Australia (which accounts for 60% of national production) are
obtained. Productivity estimates are derived using regional gold
production estimates from the Australian Bureau of Agricultural
and Resource Economics and Sciences. The upper bound is
49,000 in metal ore mining in June 2011 from the Australian
Bureau of Statistics.
Papua New
Guinea
Company
accounts
Newcrest Mining Ltd Annual Report
2012 and sustainability report 2012,
Ok Tedi Annual Report 2011, Allied
Gold Annual Report 2011
Financial and employment data from three companies on four
mines covering 62% of national production are used to estimate
Brazil
Company
accounts
Luna Gold Annual Report 2012,
Jaguar Mining Annual Report 2012,
Yamana Gold Annual Report 2012
and CSR report 2011, Aura Minerals
Annual Report 2012
Financial and employment data from four companies on nine
company-level GVA per worker. The upper bound is 175,000 in
2011 based on data from the Brazilian Mineral Institute (IBRAM).
Tanzania
Company
accounts
African Barrick Gold
Financial and employment data from one company on four mines
covering 43% of national production are used to estimate
Indonesia
Company
accounts
Freeport Mc-MoRan Annual Report
2011, Newcrest Mining Ltd Annual
Report 2012 and sustainability report
2012, Newmont Annual Report 2012,
Social Impact Assessment Report
2012 for Batu Hijau
Financial and employment data from two companies on two mines
Ghana National sources Ghana Chamber of Mines Data for 2011 on gold mining employment.
United
States
National sources United States Census Bureau
Data on employment for gold ore mining from the United States
Census Bureau for 2010. These data may exclude employment in
gold processing activities so this may understate the figure.
Peru
Company
accounts
Goldfields Annual Report 2011,
Compania de Minas Buenaventura
SEC report 2012
Data on employment for the four largest mines in Peru covering
52% of national production are obtained froma World Gold
Council report for Peru
69
. Production per head is estimated and
scaled up to national levels using national production data.
Mexico
Company
accounts
New Gold Annual Report 2011, Cerro
San Pedro and Mesquite sustainability
report 2011, Goldcorp website,
Alamos Gold Annual Report 2012,
Agnico Eagle Annual Report 2011
Financial and employment data from four companies on five
Canada
Company
accounts
Agnico Eagle Annual Report 2011,
Goldcorp website
Financial and employment data from two companies on six mines
company-level GVA per worker. The upper bound is 31,631 in
metal mining 2012 from Statistics Canada.
Argentina
Company
accounts
Yamana Gold Annual Report 2012,
Troy Resources Annual Report 2012
Financial and employment data from two companies on three
69
World Gold Council (2011) The economic contribution of large-scale gold mining in Peru, March 2011.
PwC 42
Country Estimation
approach
Sources Note
Uzbekistan
No information
available
No information available
N/A
Investment
Another measure of the economic significance of gold mining is the level of capital expenditure (capex) made by
companies operating in the sector. It is a forward looking indicator of future GVA. It should not, however, be
seen as additional to GVA as some of the resources used to fund capex (such as retained profits) are already
captured in the calculation of GVA.
The estimates distinguish between ongoing capex spending to maintain existing operations - and expansion
capex spending used to expand current operations or develop new operations. These values are taken directly
without further adjustment from Thomson Reuters GFMS Mine Economics. The following calculation is used to
estimate total investment:
= +
It should be noted that capital expenditure estimates are reported only for a sample of mines for each country,
with some countries having better coverage than others. The total investment estimate, therefore, does not
capture the full scale of investment taking place in these countries. In addition, the total capital investment
reported also excludes expenditure on exploration. Although these are not reported due to the lack of consistent
data across mines, it is acknowledged that exploratory activity is potentially significant and generates value for
the local economy. It may also result in the subsequent establishment of full-fledged mining operations which
add more value and provide further employment opportunities within the local economy.
Exports
For some countries, gold mining represents a significant source of exports and, therefore, foreign exchange
earnings. Data on exports of gold are collated by UNCTAD from national sources and are reported directly in
this report without further adjustment.
Some care is needed in interpreting the export data as several apparent discrepancies are noted when reviewing
the trade data collated by the UN.
First, comparing data on the value and volume of gold exports allows an implied unit value to be derived. In
Mexico, Argentina and Peru, this implied unit value of gold is significantly less than the world gold price in the
same year
70
. In the other leading producing countries, the implied value is extremely close to the world gold
price. This apparent anomaly may reflect several factors:
Data integrity issues: for example, it is suggested that gold commodity trade may sometimes be coded
inaccurately;
The influence of artisanal gold production; and
The impact of foreign exchange controls.
Furthermore, the lower unit value of exports in these countries is not consistent with the realised price per
ounce of gold reported in the company reports of a sample of producers, which tend to be close to the world
price of gold.
In addition, the data on export values are significantly higher than mine production values for some countries,
notably the United States and Canada. Gold is a highly-traded commodity and many countries import and
export large quantities of gold at different stages of the fabrication process.
Recycling of gold
Data limitations mean that the economic contribution of gold recycling cannot be estimated as easily and with
the same degree of confidence as that associated with gold mining. Whilst there are data on where gold is
recovered, the lack of data on where recycled gold is refined prior to re-entering the market (where most of the
value added from gold recycling is generated) rules out further analysis at a country level. The potential
contribution of global recycling is, therefore, only analysed at the global level.
70
PwC 43
The contribution of gold recycling globally is estimated by determining the value of gold produced by recycling
to estimate the revenue attributable to recycling and then estimating the element which is GVA by applying the
turnover/GVA ratio.
= /
The volume of gold produced through recycling is derived from the World Gold Council (based on data from
Thomson Reuters GFMS Gold Survey 2013). This volume is then multiplied by the average price of gold for
2012 to estimate the revenue generated by gold recycling.
The GVA generated by gold recycling is estimated by multiplying revenue by the estimated turnover/GVA ratio.
This ratio is not available specifically for gold recycling so the ratio for the total recycling sector is used as a
proxy. It is not known whether this ratio is an accurate representation of gold recycling activities. It is also
recognised that gold recycling may involve some elements of fabrication. To reflect this uncertainty, and to test
the sensitivity of the results to the assumption, the global turnover/GVA ratio for the manufacturing sector is
also used to estimate GVA.
Sensitivity analysis is also conducted by applying country-specific ratios of manufacturing and recycling
turnover/GVA ratios (where available) to generate lower and upper bound estimates of global gold recycling
GVA. These figures show the estimates of GVA that would be generated if the whole of global gold recycling and
refining activity were to take place in each country. These results of the analysis are shown in Table 24, whilst
the sources for turnover/GVA ratios that are used in this sensitivity analysis are presented in Table 25. For all
countries (with the exception of India), the manufacturing sector ratios yield the lower bound of gold recycling
GVA estimates and the recycling sector ratios provide the upper bound of the estimates.
Table 24: Estimated turnover and GVA of global gold recycling using country-specific ratios (US$ millions,
2012)
Country Using manufacturing sector ratios Using recycling sector ratios
Global gold recycling GVA
using a selection of
country-specific ratios
United States 36,200 37,300
Switzerland 29,700 33,400
China 17,900 32,700
Turkey 15,600 21,000
India 15,300 14,500
Source: PwC analysis using data from Thomson Reuters GFMS Gold Survey 2013, World Input-Output Database (WIOD) and national
statistical offices
Table 25: Turnover/GVA ratios and data sources used in the sensitivity analysis of GVA estimates
Manufacturing Notes and source Recycling Notes and source
China 4.85 Data from WIOD 2.65 Data from WIOD
71
India
5.67
Data from the Ministry of Statistics
and Programme Implementation
5.99
Data from WIOD
Switzerland 2.92 Data from Eurostat 2.60 Data from Eurostat
Turkey
5.57
Data from the Turkish Statistical
Institute
4.14
Data from WIOD
United States
2.40
Data from the United States Census
Bureau
2.33
Data from WIOD
Source: PwC analysis using data from Thomson Reuters GFMS Gold Survey 2013, World Input-Output Database (WIOD) and national
statistical offices
Demand for gold
This part of the Appendix describes the methodology used to estimate the direct economic and fiscal impacts
associated with the activities which support the demand for gold. In practice, the approach used follows similar
principles for each application, and builds on the approach used to estimate the direct economic impact of gold
recycling. Thus, this part of the Appendix begins by highlighting the key issues linked to the sources of available
data, rather than repeating the principles described in relation to gold recycling. It then considers each of the
three main areas in turn: bar and coin, jewellery and other technological fabrications which use gold.
71
World Input-Output Database (WIOD).
PwC 44
The scope of this analysis covers the top 13 gold consuming countries. There is an important distinction to be
made here between gold fabrication demand and consumption demand. Fabrication refers to the first
transformation of gold bullion into a semi-finished or finished product
72
, whereas consumption refers to the
end use of gold (whether in the form of jewellery or investment products such as bars and coins) by the final
consumer.
Estimating GVA attributable to gold demand
There are two broad ways of estimating the GVA attributable to gold. These are outlined as follows.
First, the bottom up approach (which is used in this report) starts from estimates of the fabrication and
consumption demand of gold and then uses the average gold price to estimate the cost of gold as an input to the
fabrication process. The revenue earned by fabricators and producers is then estimated by applying a mark-up
to this input to give the turnover/revenue attributable to gold. Then, the ratio of turnover to GVA is applied to
the turnover/revenue to estimate the value added to gold as an input into the production process.

/

In summary, the key components of the analysis include:
The fabrication and consumption demand for gold by use which provide an indication of the cost of gold
inputs;
The fabrication (and retail for jewellery) mark-ups which allow the estimation of turnover attributable to
gold; and
Turnover/GVA ratios which are used to convert turnover to estimates of GVA attributable to gold.
National data sources, such as national accounts, industry surveys and input-output tables, are used in the first
instance to derive turnover/GVA ratios. Where these are not available, data compiled by international sources
are used, such as the WIOD. Detailed sector level data are also used where available (e.g. jewellery fabrication,
manufacture of electronic and optical goods, jewellery retail etc.). In practice, however, the data on turnover
and GVA at detailed sector levels (e.g. 4-digit NACE Rev.2 or 4-digit ISIC Rev.4 sectors
73
) are not available on a
consistent basis for some countries. In these cases, estimates using higher level sector aggregates are used
instead.
Bar and coin
This category of demand includes global investment in physical gold in bar form, official coin, medals and
imitation coin fabrication and sales. Specific data on mark-ups and turnover/GVA ratios are not available for
detailed manufacturing sectors such as the striking of coins or the fabrication of gold bars. Instead, estimates of
mark-ups are derived on the basis of publicly-available financial accounts of government mints and major gold
fabricators and refiners. Turnover/GVA ratios are for the manufacturing sector for each country. More details
of the sources used to generate these estimates are set out in Table 26.
Table 26: Assumptions made in deriving GVA estimates for bar and coin fabrication
Mark-up Notes and source
Turnover/GVA
ratio
Notes and source
China 31% Indian Government Mint 4.85 Data from WIOD
Egypt 80% Turkish State Mint 2.53
Proxied by Saudi Arabia ratio
Data from the Central Department of
Statistics and Information
Germany 3%
European and United States
fabricators (see note below)
3.84 Data from Eurostat
India 31%
Indian Government Mint
5.67
Data from the Ministry of Statistics and
Programme Implementation
Indonesia 31% Indian Government Mint 2.69 Data from WIOD
Russia 3% European and United States 3.37 Data from WIOD
72
World Gold Council (2013) Gold Demand Trends: Full Year 2012, February 2013.
73
European Classification of Economic Activities (NACE) Revision 2, 2008, Eurostat and the International Standard Industrial
Classification of All Economic Activities (ISIC) Revision 4, 2008, UNstatistics.
PwC 45
Turnover/GVA
ratio
Notes and source
Saudi Arabia & Yemen 80% Turkish State Mint 2.53
Switzerland 3%
European and United States
Thailand 31% Indian Government Mint 4.15 Data from the Central Statistical Office
Turkey 80%
Turkish State Mint
5.57
Data from the Turkish Statistical
Institute
United Arab Emirates 80%
Turkish State Mint
3.03
Data from the National Bureau of
Statistics
United States 4%
Data using the United States
Mint, Royal Australian Mint
and the Perth Mint
2.40
Bureau
Vietnam 31%
Data using the Indian
Government Mint
4.21 Data from the General Statistics Office
Note: the European and United States fabricators referred to include Allgemeine Gold AG, Aurubis AG, Heraeus Holding GMBH, Metalor
Technologies International SA, Matsuda Sangyo Co., Johnson Matthey plc, and Umicore SA.
To estimate the value associated with the consumption of gold bar and coin, mark-ups are first derived by
comparing the sale price of gold products from gold bullion and coin dealers and brokers (on a US$per ounce
basis) to the LBMA gold price
74
. Estimates for mark-up are obtained from dealers for various countries.
Turnover/GVA ratios are for the retail sector for each country. More details of the sources used to generate
these estimates are set out in Table 27. Table 29 lists the various gold bullion and coin dealers that were
consulted in deriving estimates for margins. It should be noted that 2012 data for margins were not available on
a consistent basis, and as such the data presented in these tables are for 2013.
Table 27: Assumptions made in deriving GVA estimates for bar and coin consumption
Mark-up
Source (dealer
country)
Turnover/GVA ratio Notes and source
China 7% Data for China 1.66 Data from WIOD
Egypt 7% Data for UAE 2.88
Proxied by Saudi Arabia ratio. Data from the
Central Department of Statistics and Information
Germany 6% Data for Germany 4.91 Data from Eurostat
India 14%
Data for India
1.12
Indonesia 14% Data for China 1.69 Data from WIOD
Saudi Arabia & Yemen 14%
Data for UAE
2.88
Data from the Central Department of Statistics
and Information
Switzerland 6% Data for Germany 4.11 Data from Eurostat
Thailand 7% Data for China 4.34 Data from the Central Statistical Office
Turkey 7% Data for UAE 1.35 Data from the Turkish Statistical Institute
United Arab Emirates 7% Data for UAE 1.31 Data from the National Bureau of Statistics
United States 8% Data for US 1.40 Data from the WIOD
Vietnam 7% Data for China 1.69 Data from the General Statistics Office
Table 28: Detailed sources of mark-up estimates for bar and coin retail
Dealer country Detailed sources All data from2013 unless otherwise stated
China
China Construction Bank, Guoding National Bank, Agricultural Bank of China, Merchants Bank, QJX Gold,
Shanghai Si Erwo, Ying Jie Sheng, Heng Tai Da Dong
India
Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Corporation Bank, HDFC Bank, ICICI Bank, India
Overseas Bank, IndusInd Bank, Kotak Mahindra Bank, Oriental Bank of Commerce, Punjab and Sind Bank, Punjab
National Bank, State Bank of Hyderabad, State Bank of India, Union Bank of India
United Arab Emirates Gold Arab Emirate
74
PwC 46
Dealer country Detailed sources All data from2013 unless otherwise stated
US Bullion Supermarket (AU Trading, GoldSilver.com, Kitco)
Germany Coin Invest Direct, Pro Aurum
Larger bars and coins also attract smaller price premia on a per ounce basis compared to smaller
denominations in usual market conditions, i.e. a 1/10 ounce gold coin will usually sell for a higher premium
than a 1 ounce gold coin. However, due to the lack of data on bar and coin demand by size, refining the analysis
on this basis is not possible.
Jewellery
For the majority of countries in the study, the turnover/GVA ratios for the jewellery fabrication sector are
largely available. Where this is not the case (e.g. China, Indonesia, Russia and UAE), the manufacturing sector
ratios are used instead. Similarly for retail, where jewellery-specific retail estimates are not available, the data
for the total retail sector are used instead. Table 29 and Table 30 show the mark-ups and turnover/GVA ratios
used in generating estimates of the GVA associated with gold jewellery fabrication and retail for each country
respectively.
Table 29: Assumptions made in deriving GVA estimates for jewellery fabrication
Turnover/GVA
ratio
Notes and source
China 4%
Asia-Pacific jewellery fabricators from
S&P Capital IQ
4.85
Data from WIOD
Not specific to jewellery fabrication
Egypt 4%
Middle East and African jewellery
fabricators from S&P Capital IQ
2.42
Germany 25%
European jewellery fabricators from
S&P Capital IQ
India 4%
S&P Capital IQ
4.31
Indonesia 4%
S&P Capital IQ
2.69
Data from WIOD
Russia 14%
European and Middle East/African
jewellery fabricators fromS&P Capital
IQ
3.37
Data from WIOD
Saudi Arabia
& Yemen
4%
2.42
Switzerland 25%
European jewellery fabricators from
S&P Capital IQ
Thailand 4%
S&P Capital IQ
3.25 Data from the Central Statistical Office
Turkey 14%
12.92 Data from the Turkish Statistical Institute
United Arab
Emirates
4%
3.03
Data from the National Bureau of Statistics
United States 17%
North American jewellery fabricators
from S&P Capital IQ
1.96 Data from the United States Census Bureau
Vietnam 4%
S&P Capital IQ
2.25 Data from the General Statistics Office
PwC 47
Table 30: Assumptions made in deriving GVA estimates for jewellery consumption
Mark-up Notes and source Turnover/GVA ratio Notes and source
China 39%
The data for retail mark-ups
are obtained from Thomson
Reuters (2010) Gold
Jewellery Value Report,
report prepared for the
World Gold Council
1.66
Data from WIOD
Not specific to jewellery retail
Egypt 25% 2.88
and Information
Germany 163% 3.92 Data from Eurostat
India 11% 6.79
Indonesia 15% 1.69 Data from WIOD, not specific to jewellery retail
Russia 147% 1.46 Data from WIOD, not specific to jewellery retail
Saudi Arabia
& Yemen
24% 2.88
and Information
Switzerland Data from Eurostat
Thailand 13% 4.34
Data from the Central Statistical Office
Turkey 110% 14.23 Data from the Turkish Statistical Institute
United Arab
Emirates
23% 1.31
Data from the National Bureau of Statistics
United States 169% 2.06 Data from the United States Census Bureau
Vietnam 19% 1.69
Data from the General Statistics Office
Technological fabrications which use gold
This category of demand includes all gold used in the fabrication of electronics, dental, medical, industrial,
decorative and other technological applications, including gold destined for plating jewellery.
In estimating the GVA attributable to gold in electronics, the data on mark-ups are obtained from industry and
market analysis reports for electrical components and equipment manufacturing, while the turnover/GVA
ratios are obtained for the manufacturing of electrical and optical equipment sector from national and
international sources. More details of the sources used to generate these estimates are set out in Table 31.
Table 31: Assumptions made in deriving GVA estimates for electronics
Turnover/GVA
ratio
Notes and source
China
2%
Asia-Pacific electrical components and
equipment manufactures from S&P
Capital IQ 6.19
Data from WIOD
Germany
11%
European electrical components and
equipment manufacturers from S&P
Capital IQ 2.99
Data from Eurostat
India
2%
Asia-Pacific electrical components and
Capital IQ 5.13
Russia
11%
electrical components and equipment
manufacturers, data fromS&P Capital IQ 2.93
Data from WIOD
Switzerland
11%
European electrical components and
Capital IQ 2.77
Data from Eurostat
United States
16%
North American electrical components and
Capital IQ 1.84
Bureau
PwC 48
For the use of gold in dental equipment, the data on mark-ups are obtained from industry and market analysis
reports for dental care equipment manufacturing, while the turnover/GVA ratios are obtained for the
manufacturing of medical and dental supplies (with the exception of Russia) from national and international
sources. More details of the sources used to generate these estimates are set out in Table 32.
Table 32: Assumptions made in deriving GVA estimates for dentistry
Turnover/GVA
ratio
Notes and source
Germany 12%
European dental care equipment
manufacturers from S&P Capital IQ 2.34
Data from Eurostat
Russia 12%
Average for European and Middle
East/African dental care equipment
manufacturers from S&P Capital IQ
2.93
Data from WIOD
Not specific to dental equipment
manufacturing
Switzerland 12%
European dental care equipment
Data from Eurostat
United States 28%
North America dental care equipment
Bureau
For the use of gold in other industrial processes or for decorative purposes, the data on mark-ups are obtained
from industry and market analysis reports for manufacturing, while the turnover/GVA ratios are obtained for
the total manufacturing sector from national and international sources. More details of the sources used to
generate these estimates are set out in Table 33.
Table 33: Assumptions made in deriving GVA estimates for other industrial
Turnover/GVA
ratio
Notes and source
China 4%
Asia-Pacific manufacturing companies
from S&P Capital IQ
4.85 Data from WIOD
Germany 8%
European manufacturing companies from
S&P Capital IQ
India 4%
from S&P Capital IQ
5.67
Russia 8%
manufacturing companies fromS&P
Capital IQ
2.92 Data from WIOD
Switzerland 4%
European manufacturing companies from
S&P Capital IQ
Thailand 11%
from S&P Capital IQ
2.40 Data from the Central Statistical Office
United States 4%
North American manufacturing companies
from S&P Capital IQ
4.85
Bureau
PwC 49
Contacts
Authors Industry
TimOgier
Consulting
T: +44 (0) 207 804 5207
E: tim.ogier@uk.pwc.com
John Gravelle
Canada
Global Mining Leader
T: +1 416 869 8727
E: john.gravelle@ca.pwc.com
Jason Burkitt
UK
Partner
T: +44 (0) 20 7213 2515
E: jason.e.burkitt@uk.pwc.com
Mark Ambler
Consulting
T: +44 (0) 207 213 1591
E: mark.d.ambler@uk.pwc.com
Hein Boegman
South Africa
Partner
T: +27 11 797 4335
E: hein.boegman@za.pwc.com
Sacha Winzenried
Indonesia
Partner
T: +62 21 5289 0968
E: sacha.winzenried@id.pwc.com
Yong Jing Teow
Consulting
T: +44 (0) 207 804 4257
E: yong.jing.teow@uk.pwc.com
John Campbell
Russia & Central & Eastern Europe
Partner
T: +380 (44) 490 6777
E: john.c.campbell@ua.pwc.com
Steve Ralbovsky
U.S.A.
Partner
T: +1 (602) 364 8193
E: steve.ralbovsky@us.pwc.com
Kameswara Rao
India
Partner
T: +91 40 6624 6688
E: kameswara.rao@in.pwc.com
Jock OCallaghan
Australia
EU&M Industry Leader
T: +61 (3) 8603 6137
E: jock.ocallaghan@au.pwc.com
Ronaldo Valino
Brazil
Partner
T: +55 (21) 3232 6015
E: ronaldo.valino@br.pwc.com
Ken Su
China
Partner
T: +86 (10) 6533 7290
E: ken.x.su@cn.pwc.com
The work carried out by PricewaterhouseCoopers LLP ("PwC") in relation to this report has been carried out only for the
World Gold Council and solely for the purpose and on the terms agreed between PwC and the World Gold Council. The
report does not constitute professional advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this report and, to the extent permitted by law,
PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or
duty of care for any consequences to anyone acting, or refraining to act, in reliance on the information contained in this
report or for any decision based on it.
2013 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers LLP
(a limited liability partnership in the United Kingdom), which is a member firm of PricewaterhouseCoopers International
Limited, each member firm of which is a separate legal entity.

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